In recent years, the percentage of U.S. homeowners without a mortgage has surged, climbing from under 33% in 2010 to 38.5% in 2024. This trend can be attributed to two main factors: an aging U.S. population and a severe affordability crisis making it difficult for new homeowners to secure mortgages.
Firstly, the aging population in the United States plays a pivotal role in this shift. As baby boomers advance in age, many have successfully paid off their mortgages, contributing to the rise in mortgage-free homes. According to the U.S. Census Bureau, over 38.5% of individuals aged 65 and older are mortgage-free, showcasing the financial stability of this aging demographic.
Secondly, the affordability crisis has left younger generations grappling with prohibitive housing costs. Escalating home prices and higher mortgage interest rates have deterred new homebuyers from taking on mortgages. Research shows that the housing market requires a median annual income of over $100,000 to afford the median home price, up from around $50,000 just a few years ago. This sharp rise underscores the increasing unaffordability of today’s housing market.
Housing is becoming increasingly unaffordable across many regions. In fact, from 2019 to 2023, the median home price surged from $249,400 to $303,400. This has created a significant barrier for young adults aiming to purchase their first homes. Housing affordability dropped sharply from 2010 to 2024, with a substantial number of Americans struggling to afford even modest dwellings.
Sources:
https://www.census.gov/newsroom/press-releases/2024/acs-5-year-homeowners-renters.html
https://www.bankrate.com/homeownership/home-ownership-statistics/
h/t IAmNotAnEconomist
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