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Nearly 40% of U.S. homes are mortgage-free, census shows

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Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#61

Post by FooBarBizBazz »

victor106 wrote: post #50
onlyrealcuzzo wrote: post #41

Earlier quoted context omitted.

~67% of homes are owner occupied. It's unlikely ~100% of the investor owned homes are free and clear and only ~3% of owner occupied homes are owned free and clear. For one, the tax code HEAVILY incentivizes investors to own property on leverage. For two, the only reason property is/was a good investment was because of artificially low interest rates for most of the last ~25 years (an entire generation of investors).…

> he tax code HEAVILY incentivizes investors to own property on leverage How? any resources I can find on this topic?

I think this is referring to --

1. The mortgage interest deduction (reduced under Trump, of all presidents).

2. 1031 Exchange elections, which let you avoid capital gains.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#62

Post by [deleted] »

IKantRead wrote: post #31
_ea1k wrote: post #12

Interesting, given all of the articles about increasing consumer debt. I'd guess that a lot more people are motivated to do this, with mortgage rates fluctuating upward so quickly over the last couple of years.

As this other comment pointed out [0] 40% of homes are mortgage free, but that says nothing about home owners . Anecdotally I know that none of my neighbors are mortgage free. However I also have a few friends that had major cash windfalls things like startup exits or time working in hedge funds, each of them owns 3-5 houses outright as investments. So, with this small sample I can easily see that of the total number…

[deleted]

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#63

Post by solumunus »

onlyrealcuzzo wrote: post #55
lo_fye wrote: post #42

Translation: Nearly 40% of US homes are mortgage-free (and owned by Boomers)

Translation: ~30% of homes have been owned for more than 20 years, and guess what happens at the end of a mortgage and after 20 years of inflation? And guess how much money the top 10% have? Close to $2m counting their house... You'll be old one day, too - believe it or not. The boomers aren't special. They're just old. One day they'll be dead, and you'll be the old person everyone complains about who owns their hous…

The boomers bought these houses for much less (proportional to their income) than people buying today. By quite a large margin. So yes, they’re special in that sense. People today won’t be nearly as well off in 30 years as the boomers were in a comparable timeframe. If current trajectory continues the kids in 30 years will be rioting, not complaining.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#64

Post by presidentender »

postalrat wrote: post #34
presidentender wrote: post #25

Earlier quoted context omitted.

A landlord who doesn't use leverage is in the wrong asset class. Even if they'd somehow paid off the property before, anyone who didn't pull out cash when rates were below 5% and invest it elsewhere is a fool.

This explains why they own many mortgage free houses and you do not.

Trivially, yes: I invest with borrowed funds, while the hypothetical free-and-clear landlords in the previous example have paid back their loans.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#65

Post by michaelt »

WarOnPrivacy wrote: post #6

Well sure. The homes my landlord rents are mortgage free. I can say the same for folks I know with 2nd vacation homes and airbnb rentals. For the rest of my anecdata: For folks I know living in their own households, about 20% have it paid off. About half of those folks own multiple homes.

> For folks I know living in their own households, about 20% have it paid off.

Sure - if you're 25 and most of your friends are aged 20-35, probably Hell, a few years ago when interest rates were zero I heard a lot of people saying it was a bad idea to pay off your mortgage early, and far more sensible to invest the money instead. So even if the people your age got a big cash windfall, they might not have paid off their mortgage.

On the other hand, if you know a bunch of 65-year-olds who've had maybe 40 years to pay off their mortgage, and 40 years of inflation on their side shrinking the principal? It's probably a different story.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#66

Post by onlyrealcuzzo »

solumunus wrote: post #63
onlyrealcuzzo wrote: post #55

Earlier quoted context omitted.

Translation: ~30% of homes have been owned for more than 20 years, and guess what happens at the end of a mortgage and after 20 years of inflation? And guess how much money the top 10% have? Close to $2m counting their house... You'll be old one day, too - believe it or not. The boomers aren't special. They're just old. One day they'll be dead, and you'll be the old person everyone complains about who owns their hous…

The boomers bought these houses for much less (proportional to their income) than people buying today. By quite a large margin. So yes, they’re special in that sense. People today won’t be nearly as well off in 30 years as the boomers were in a comparable timeframe. If current trajectory continues the kids in 30 years will be rioting, not complaining.

~87% of purchases are financed. Back then it was probably higher. Interest rates were >13% when my boomer next-door neighbor bought her house 30+ years ago. Payments weren't much different in tax-adjusted terms than then just a few years ago.

~87% of people are buying a mortgage payment - not the sticker price on the home.

Mortgage payments are VERY high right now with respect to interest rates. Not long ago, at the beginning of the pandemic - they were quite low.

Either prices will come down - or much more likely - interest rates will go back down or - less likely - incomes will go up (or a combination of the 3).

Kids 30 years from now will be complaining. Song as old as time.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#67

Post by k1t »

hondo77 wrote: post #44
Pigalowda wrote: post #33

Earlier quoted context omitted.

Blackrock and other funds buy thousands of homes and rent them out. Those are mortgage free homes.

Why would they pay cash instead of getting big loans for multiple properties at a favorable rate?

You can still finance the properties with debt, without it being a mortgage.

For example, taking out a single large loan, then using that to purchase many properties with "cash".

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#68

Post by FireBeyond »

fred_is_fred wrote: post #45
bodeadly wrote: post #43

I have a crazy theory: Zillow is directly responsible for the housing shortage and high home prices. Zillow inspires people to move. More moving means houses get fixed up which increases home values. Browsing through homes on Zillow might start out as something to do when your bored but that can easily lead to "what if" thinking. Before Zillow they wouldn't even be thinking about moving.

Agree that Zillow and similar make it much easier and top of mind. Home flipper shows on HGTV are also part of the equation since it looks very simple and like guaranteed profit.

"You put $40,000 into your kitchen and bathroom remodel, so that will increase the value $100,000".

There's definitely value for opportunity cost, but oh boy do some of those shows exaggerate it to the point of absurdity. Especially when it's a builder-grade remodel.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#69

Post by ryandrake »

FooBarBizBazz wrote: post #61
victor106 wrote: post #50

Earlier quoted context omitted.

> he tax code HEAVILY incentivizes investors to own property on leverage How? any resources I can find on this topic?

I think this is referring to -- 1. The mortgage interest deduction (reduced under Trump, of all presidents). 2. 1031 Exchange elections, which let you avoid capital gains.

> The mortgage interest deduction (reduced under Trump, of all presidents).

The way I understand it, reducing the mortgage interest deduction disproportionately affected homeowners with higher mortgages in high cost of living areas, just like reducing the SALT deduction affected people in higher income tax/cost of living areas. Both of these were likely supported by President Trump to punish "blue staters" in these areas.

Re: Nearly 40% of U.S. homes are mortgage-free, census shows

#70

Post by ryandrake »

fred_is_fred wrote: post #51
_ea1k wrote: post #12

Interesting, given all of the articles about increasing consumer debt. I'd guess that a lot more people are motivated to do this, with mortgage rates fluctuating upward so quickly over the last couple of years.

In fact the opposite is true. My mortgage is 2.125% and I have no motivation to pay that off because of rates spiking upward which gives me a better cash return than 2.125%.

If I could, I would pay off my 7.075% mortgage this minute. That's equivalent to a 7.075% guaranteed risk-free return, which I will not get on any other investment.
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