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No, not necessarily. For example, in Pittsburgh you can get a reasonable house for $100,000 and even someone with a lowish paying job can pay that off within ~15 years. On the other hand prices today in Los Angeles vastly outstrip younger residents income, a large portion can't even afford to pay and those that do will be lucky to have it paid off in 30 years.
There is another factor as well, in Pittsburgh real estate has been flat for a long time so people there don't have the real estate bug like they do here. That is, they aren't able to use their appreciation to "move up", if you "move up" in Pittsburgh you have to bring some real money to the table either in the form of a higher income or more cash. Where as in California it was the norm to "move up", especially for the boomers, but people often reset their mortgage when they "move up" to maximize the house they can afford.
In California, people take on more roommates to pay for the mortgage, because the price is so high. It's not uncommon for somebody to buy a 3 bedroom house and rent out the other 2 bedrooms to friends or relatives. While an FHA loan with only a 3% down payment would have a high monthly mortgage payment and FHA MI, the monthly mortgage is not so bad with roomies.
When they are mid-career yuppies with higher incomes, then they can start getting rid of roomies and bring in a wife.
In California, people take on more roommates to pay for the mortgage, because the price is so high. It's not uncommon for somebody to buy a 3 bedroom house and rent out the other 2 bedrooms to friends or relatives. While an FHA loan with only a 3% down payment would have a high monthly mortgage payment and FHA MI, the monthly mortgage is not so bad with roomies.
Sure this isn't uncommon, but this is just to say that people in LA have lower standards of living than people in places like Pittsburgh where here is really no need to do this sort of thing. Also, the only way you can so easily rent out rooms is when there is a lot of, mostly low income, renters....
Only a small percent become "yuppies with higher incomes".
I'm not surprised by the article. My parents, in L.A., have paid off their house. They bought it about 25 years ago when it was much cheaper, and they intended to have it paid off before they retired, which they did. I live in the Bay Area, and I paid off my house a few years ago when I recieved a small windfall when the company I worked for was acquired and my stock options were paid out in cash.
The figure of nearly one-third of homeowners oweing nothing (having no mortgage) comes from a Zillow estimate, so it should not be taken as hard data. However, that was (to me) a surpisingly large percentage. Regional differences are fairly pronounced, with Pittsburgh showing 38.6% and Washington D.C. at 15.5%. There is also a wide variation by age group, with 85 and older at 77.6%. The age factor is not completely linear, however, with an "outlier" group of 20-24 year olds at 34.5%. My thinking is that not that many 20-24 year olds are homeowners at all, and those that are may have had substantial help from parents and/or trust funds.
Doom-and-gloomers in this forum like to emphasize how precarious the situation of people is, but here is a counter-indication of how solidly situated many, many people are.
Notice how they do not say what the wealth bracket of those whom have their homes paid for is.
It is not bad times for the wealthy, only for the middle and lower classes.
Notice how they do not say what the wealth bracket of those whom have their homes paid for is.
It is not bad times for the wealthy, only for the middle and lower classes.
You don't have to be wealthy in order to have a paid-off house. You just have to never move. If you live in the same house for 20, 30, 40 years, your house will be paid off too. As I mentioned, my parents have been living in the same house for 25 years or so; they paid it off. My in-laws bought the house they live in when my wife was five years old; she's now over 40. You can bet that in more than 35 years they've paid it off. I know lots of older retired people in similar situations. They found a house they liked when they were younger, and never had a reason to move, so eventually the house got paid off.
Ah yes, and they never took out home equity loans, that's another important factor.
Notice how they do not say what the wealth bracket of those whom have their homes paid for is.
It is not bad times for the wealthy, only for the middle and lower classes.
The wealthy do not constitute one-third of the homeowners in this country. Therefore, plenty of non-wealthy have paid-off houses.
You (didn't) have to be wealthy in order to have a paid-off house.
You just (had) to never move.
The key to making it work being relative affordability at the outset.
To whatever degree that may have been difficult 20, 30, 40 years prior...
it's nearly impossible for most of that same demographic today.
LA County school teacher salary (45,000-62,000)...
Call it $55,000 x 2.5 common affordability multiplier = $137,500
The wealthy do not constitute one-third of the homeowners in this country. Therefore, plenty of non-wealthy have paid-off houses.
Well he could have a point. I looked at the Zillow report and its just not clear whether they screened out investment properties or not. Even if you made an effort, it would still be difficult to know which properties were primary residences, vacation homes and which were investment properties by looking at mortgage data which is what Zillow did. So more than likely, if you look at just primary residences the numbers wouldn't be as good.
By the way, this report comes from the negative equity report by Zillow that shows that ~30% of home owners with a mortgage are under water.
So regardless of the details, this report just shows that the US is becoming a land of extremes.
The wealthy do not constitute one-third of the homeowners in this country. Therefore, plenty of non-wealthy have paid-off houses.
Just anecdotal data, but I know numerous retirees, many living only on SS, that own their homes outright. After forty or fifty years of working things do get paid off.
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