When people say they own their home, it’s usually a half-truth at best. Often, a bank owns the home they live in — most of it, anyway.
Still, Americans have a lot of real money tied up in their homes — on average, $150,506, according to a new report by the Urban Institute called “How Much House Do Americans Really own?Measuring America’s Accessible Housing Wealth by Geography and Age.”
That amount represents what’s left over after the debt on the mortgage is subtracted from the home’s 2015 value. It alsorepresents a major portion of most Americans’ net worth, making “net housing wealth” a critical element to many families’ economic future and security.
The housing wealthy
Not surprisingly, there are wide disparities of net housing wealth among age groups and geographic areas. Older folks who’ve been paying mortgages longer own more of their homes, and places where real estate values have skyrocketed also add to this real net housing worth bottom line. In Washington, D.C., the average net worth is around $381,000, for example, while in Arkansas, it’s around only $80,000. Meanwhile, California had only 9.3% of all owner-occupied housing units but accounted for 20.4% of total net housing wealth for the country.
These aren’t merely paper values; homeowners can borrow between 75 and 85% of the net value of their homes via home equity loans or lines of credit, depending on their credit score. Cash-out loans and reverse mortgages are also possible. So net home wealth represents a real, usable asset that can serve both as safety net and opportunity for investment.
“Home ownership is important to building wealth,” said report author Laurie Goodman. “This can be seen by the fact that housing wealth, while inequitably distributed, is still more equitably distributed than other types of wealth.”
Nationally, there were over 73 million owner-occupied housing units in the U.S. in 2015. Of these, around 46 million had home debt such as mortgages and equity loans, and nearly 27 million were owned free and clear. The Urban Institute calculates that there is about $11 trillion in total net housing wealth across the country, and about $7 trillion of that could be turned into cash through lending products.
Age is big predictor of net housing wealth. The report found that those over 60 hold 52% of all home equity. Those under 50 hold only 23%. Meanwhile, owners under 40 owned 17% of all owner-occupied housing units but had only 6% of accessible housing wealth.
But real home net worth exists all around the country, and by some measures is spread around fairly evenly. The report found that 80% of all homeowners nationwide had equity at or above 15% of the current value of their home. In Hawaii, Washington, D.C., Vermont, and California, nearly 90% of homeowners had at least 15% equity. In Rhode Island and Nevada, the rate was 70-72% — not so wide a gap.
On the other side of the coin, there are still substantial numbers of Americans for whom their house is a liability, not an asset.
The report says that almost 9% of homeowners aged between 50 and 59, and 7.5% of those aged 60-64 owed over5% more than their houses were worth. That group is staring at retirement while being upside-down on a mortgage.
Much has been made in recent years about the stagnant wages of the American middle class, but middle class net worth has also been stagnant. For example, a2014 report by the U.S. Census showed that the middle quintile of Americans saw their net worth shrink from $74,000 to $69,000 between the years 2000 and 2011. On the other hand, the richest 20% of Americans saw their net worth soar overthe same period.
The Urban Institute authors note concerns about some government policies that might exacerbate housing-based inequality. Still, they conclude, home ownership is an important part of wealth building for the vast majority of the U.S. population.
“Government at all levels — the government-sponsored enterprises, lenders, housing providers and advocates — must work together to improve access to mortgage credit that allows owners to sustain home ownership and enhance the economic well-being of their families,” it says.
Remember, a good credit score can help yousecure an affordable mortgage, so it’s a smartidea to see where you stand before you start filling out applications. If your credit is looking a little lackluster, you may be able to improve your score ahead of time by disputing errors on your credit reports, paying down high credit card balances and limiting new credit inquiries until your standing rebounds.
Credit.comis a USA TODAY content partner offering financial news and commentary, and users of the website can view their credit scores for free every month. Its content is produced independently of USA TODAY.
While the U.S. homeownership rate increased to 65.5% in 2021, the rate among Black Americans lags significantly (44%), has only increased 0.4% in the last 10 years and is nearly 29 percentage points less than White Americans (72.7%), representing the largest Black-White homeownership rate gap in a decade.
In fact, the average person will own at least three houses in their lifetime. Living in one place for most of your life may or may not be your goal, but if it is, there are things you must do as a homeowner to ensure your home lasts as long as you'd like it to.
Often, a bank owns the home they live in — most of it, anyway. Still, Americans have a lot of real money tied up in their homes — on average, $150,506, according to a new report by the Urban Institute called “How Much House Do Americans Really own? Measuring America's Accessible Housing Wealth by Geography and Age.”
What percentage of America is debt-free? According to that same Experian study, less than 25% of American households are debt-free. This figure may be small for a variety of reasons, particularly because of the high number of home mortgages and auto loans many Americans have.
According to Census Bureau data, over 38 percent of owner-occupied housing units are owned free and clear. For homeowners under age 65, the share of paid-off homes is 26.4 percent.
2021 count of owner households, with or without a mortgage
Buzz: California has 2.4 million households living what many consider a dream – being a free-and-clear homeowner, the third-highest count among the states.
Nationwide, about 27.4% of homeowners — or more than a quarter — fall into the “house poor” category, according to the data. “Overall, 21% of cost-burdened homeowners have a household income of less than $75,000,” the report states.
How Many Homes in the U.S. are Second Homes? Through our analysis we found that there are at least 2.64 million second homes in the U.S. that are for seasonal, recreational, or occasional use. How many homes are there in the United States?
The average life span of a house in the United States is about 50-70 years. Houses can last for decades if they are well-maintained and have been constructed with quality materials. A poorly built home may not last more than 20 years.
But is there a right age when these factors should be in place? And are these the factors Americans should consider when deciding to become a homeowner for the first time? In 2022, the average age of first-time homebuyers was 36, according to the National Association of Realtors (NAR). This is up from 33 in 2021.
In a study of USDA reports, Pew found the foreign country that owns the most U.S. land is not China or Russia, but rather, our neighbors north: Canada. Investors from the Great White North, according to the USDA, own about 12.8 million acres of U.S. land, most of it forest land.
“A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.” Along with these wealth gains, homeowners also saw their debt drop by 21% over the last decade, the report shows.
While the average age borrowers expect to pay off their mortgage is 59, the number of survey participants who have no idea when they will pay it off at all stood at 16%. In 2019, 9% of those asked didn't know and in 2020, 11% gave this answer.
The average American holds a debt balance of $96,371, according to 2021 Experian data, the latest data available. That's up 3.9 percent from 2020's average balance of $92,727, largely due to the rising balance of mortgage and auto loans.
Paying off your mortgage early can save you a lot of money in the long run. Even a small extra monthly payment can allow you to own your home sooner. Make sure you have an emergency fund before you put your money toward your loan.
Potential prepayment penalties are another drawback to consider. Some lenders charge fees if you pay off your loan too early, as it eats into their ability to make a profit. These fees vary, but generally, it's a small percentage of the outstanding loan balance.
Most have paid off their mortgages. In 2020, 58% of the state's equity millionaires owned their homes free and clear. Statewide, there has been a dramatic rise in the number of Californians who have paid off their mortgages, from 1.6 million households in 2000 to 2.4 million in 2020.
The decline in homeownership halted between: 2012 and 2016 for householders with less than a high school education (19.9% to 20.8%). 2016 and 2018 for those with a high school degree (30.8% to 31.4%).
(According to the Pew Research Center, about 36 percent of American households rented, rather than owned, their homes in 2019, the last year that reliable data was available from the Census Bureau.) Moody's first started tracking the metric in 1999, when the typical rent-to-income ratio was 22.5 percent.
Becoming house poor can affect your ability to save for retirement, pay off debt or afford other purchases. It can create feelings of stress and anxiety around your finances and make you feel as if you're only one setback away from financial disaster.
Many studies over the years have shown that homeowners are, on average, happier than non-homeowners. In my own calculations, using the General Social Survey, 21 percent of people who own their home are “very happy,” compared with 16 percent of those who pay rent.
The cost of buying a home is drifting further out of financial reach for the average American, according to a report from Redfin. The real estate website analyzed homes that went on sale last year and found that only 21% of them were affordable, meaning that nearly 80% of homes were outside the typical buyer's budget.
New mortgages—nearly all of which sport higher APRs and higher monthly payments than older mortgages—increased the average mortgage balance to $236,443 in September 2022, a 7.3% rise from September 2021. For the second consecutive year, the average mortgage balance increased by more than $10,000.
It's typically smarter to pay down your mortgage as much as possible at the very beginning of the loan to save yourself from paying more interest later. If you're somewhere near the later years of your mortgage, it may be more valuable to put your money into retirement accounts or other investments.
Highlights from this year's report: Nationwide, millennials have finally passed 50 percent homeownership, but they have purchased homes slower than previous generations. For instance, when Gen X was the same age as millennials today, their homeownership rate was 58 percent.
According to the market & consumer database Statista, nearly 44 million housing units were rented, comprising 34% of the total U.S. households. Per U.S. Census data, the average household size is 2.6 people. Thus, the number of renters was 114.4 million, or 35% of the U.S. population in 2021.
Investors own multiple rental properties to increase rental income, net cash flow, and tax benefits, such as depreciation. Owning multiple rental properties can help investors reduce risk through portfolio diversification.
In the United States, the majority of housing units are single-family houses – about 82 million out of the total 129 million occupied units in 2021. These homes are mostly owner-occupied, but a small share is rented.
Without special care and regular maintenance, their lifespan can reach about 200 years. But even though the materials used in many old houses are designed to last this long, there is still a chance that you will find problems in the structure or foundation.
Established houses are built to last, and many aspects of the construction cannot be reproduced today. Older homes might be built with wood made from old-growth trees (trees that attained great age by not being significantly disturbed) and therefore more resistant to rot and warping.
When building or purchasing a house, you want to choose a structure that will stand the test of time. You will most likely want to learn what type of house will last the longest. Stone and brick houses last the longest. If you are using wood, choose a hardwood for durability.
Key Takeaways. The best age to buy is when you can comfortably afford the payments, tackle any unexpected repairs, and live in the home long enough to cover the costs of buying and selling a home. Legally, you must be at least 18 in most states to buy a home.
Thanks to the Equal Credit Opportunity Act, there is no age limit to taking out a mortgage. As long as you can meet the financial requirements, you're allowed to take out a loan at any time. To take out a mortgage over 60 you will need to be able to prove your ability to repay the loan.
The overwhelming majority of millionaires own real estate, making it by far the most popular alternative asset class. That includes their own home, second homes, investment properties, and fractional ownership of investment properties through partners or programs like Arrived Homes and Roofstock One.
Today China is a country of homeowners with more than 90% of households owning homes (87% in urban and 96% in rural China) (Clark, Huang, & Yi, 2019). At the same time, more than 20% Chinese households own multiple homes, higher than many developed nations (Huang et al., 2020).
1. EMMERSON FAMILY. The nation's largest private landowners, California's Emmerson family, are a prime example of this trend. Through their Sierra Pacific Industries, the Emmersons increased their landholdings by more than 100 square miles to over 2.4 million acres.
The 2022 Land Report 100, compiled each year by The Land Report magazine, released its annual list of landowners who own the most acres in the United States. The nation's largest private landowners are the Emmerson family in California who own over 2.4 million acres.
The number of millionaire renters has tripled in the past five years. More and more millionaires are stepping on the everyman's corner and renting apartments rather than putting down roots and money to become homeowners.
Because of the many tax benefits, real estate investors often end up paying less taxes overall even as they are bringing in more income. This is why many millionaires invest in real estate. Not only does it make you money, but it allows you to keep a lot more of the money you make.
Although many people imagine millionaires owning various properties, the average American millionaire prefers to own only one property (43%), with only 8.5% of the millionaire in the U.S owning four properties or more.
In fact, 72.5% of single-unit rental properties are owned by individuals, while 69.5% of properties with 25 or more units are owned by for-profit businesses. Most rental properties are owned by individuals, but only a small share of individuals own rental property, according to IRS income-tax data.
Among racial demographics, White Americans had the country's highest home-ownership rate, while African Americans had the lowest home-ownership rate. One study shows that home-ownership rates appear correlated with higher school attainment.
The majority of Gen Z (79.8%) believe they can only afford a home that costs less than $200,000. Only 6.9% of Gen Zers believe they can afford a home over $500,000 in their desired timeframe. These discrepancies in home price affordability truly depend on the state, city and area one may be looking to buy.
But is there a right age when these factors should be in place? And are these the factors Americans should consider when deciding to become a homeowner for the first time? In 2022, the average age of first-time homebuyers was 36, according to the National Association of Realtors (NAR). This is up from 33 in 2021.
Most have paid off their mortgages. In 2020, 58% of the state's equity millionaires owned their homes free and clear. Statewide, there has been a dramatic rise in the number of Californians who have paid off their mortgages, from 1.6 million households in 2000 to 2.4 million in 2020.
“90% of all millionaires become so through owning real estate.” This famous quote from Andrew Carnegie, one of the wealthiest entrepreneurs of all time, is just as relevant today as it was more than a century ago. Some of the most successful entrepreneurs in the world have built their wealth through real estate.
Dave Ramsey, personal finance expert and founder of Ramsey Solutions, says this myth of primarily inherited riches is “flat wrong.” When Ramsey's National Study of Millionaires asked where the riches came from, they found that a whopping 79% didn't receive any inheritance from parents or other family members.
How Many Homes in the U.S. are Second Homes? Through our analysis we found that there are at least 2.64 million second homes in the U.S. that are for seasonal, recreational, or occasional use. How many homes are there in the United States?
Investors piled into the housing market in 2021 due to rock-bottom mortgage rates and surging housing demand, and are now retreating amid projections that home prices have room to fall.
The largest landowner in the world currently is King Charles III of England. How much land does the Royal Family own? He and the British Royal Family own more than 6,600,000,000 acres of land around the world. They technically own many territories around the globe, amounting to 1/6 of the surface of the planet.
1. EMMERSON FAMILY. The nation's largest private landowners, California's Emmerson family, are a prime example of this trend. Through their Sierra Pacific Industries, the Emmersons increased their landholdings by more than 100 square miles to over 2.4 million acres.
If the company has borrowed money to purchase the house, it can build equity over time, essentially increasing the percentage of the home it owns outright and can then borrow against later on.
Introduction: My name is Neely Ledner, I am a bright, determined, beautiful, adventurous, adventurous, spotless, calm person who loves writing and wants to share my knowledge and understanding with you.
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