Number was thanks to Baby Boomers paying off their mortgages
New data from the US Census Bureau shows that the share of US homes that are owned outright increased by 5% between 2012 and 2022. This means almost 40% of Americans now own their homes, up from 34% in 2013, after Baby Boomers paid off their mortgages.
A Bloomberg report noted the aging population enjoyed relatively low mortgage rates and had opportunities to refinance them as they aged.
Mortgage rates fell from around 10% in the early 1990s to around 3% before the pandemic, a Daily Mail UK report said. With the decrease, Baby Boomers were able to refinance loans, making monthly payments cheaper. In addition, they were able to take out increasingly short-term loans, which they could pay off sooner.
According to the Census Bureau data, the median sale price of a home in the US between the early 1990s up to 2020 has almost tripled. The higher appraisal on homes also enabled Baby Boomers to take out favorable new loans.
More homes owned by aging population
Between 2012 and 2022, the number of mortgage-free single-family homes increased to 33.3 million, up by 7.9 million, according to Census Bureau data. Of the 84.6 million owner-occupied homes in 2022, about 33% were owned by people who were aged 65 and above.
With record-high mortgage rates and elevated prices in recent years, younger Americans were facing a challenging housing market. According to Freddie Mac, the average rate on a 30-year fixed rate mortgage is hovering at 7.5%. This means homeowners now would have to pay an extra of more than $1,000 a month if they buy a home today compared to two years ago.
That is, in 2021, someone who acquired a $400,000 home in October 2021 would pay $1,621 per month on their mortgage assuming they made a 5% down payment. In 2023, the same owner would have to pay $2,657 per month because of the sky-high rates.
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