Two Million Californians Achieve the American Dream: Owning Homes Mortgage-Free
California is seeing a surprising trend in homeownership, with two million residents living mortgage-free in their homes. This represents 29 percent of all owner-occupied residences in the state, a significant increase from a decade ago. While overall homeownership numbers have slipped, the number of mortgage-free homes in California has grown by 20 percent in the past decade.
The trend of mortgage-free living is not unique to California, as nationwide, 27.7 million homeowners have no mortgage, accounting for 37 percent of all ownership situations. However, the median value of a mortgage-less home in California is significantly higher at $435,000 compared to the national median of $166,000.
Several factors contribute to the growing popularity of mortgage-free living in California. Many residents faced foreclosure during the housing bubble a decade ago and are now choosing to avoid debt. Additionally, an aging population and historically low-interest rates have motivated homeowners to pay off their mortgages or make all-cash purchases.
In Southern California, the trend of mortgage-free living is equally common across all four counties, with Orange County experiencing the fastest growth in debt-free homeowners. Los Angeles County has the highest number of residents living mortgage-free, with homes worth $520,000 on average.
The financial benefits of mortgage-free living are significant, with the typical mortgage-free Californian spending just $546 a month on housing costs compared to $2,188 for homeowners with a mortgage. The decline in mortgaged homes nationwide suggests a more resilient housing market, particularly in the face of economic challenges.
The significant wealth held by mortgage-free homeowners in California, estimated at $875 billion statewide, represents a substantial economic resource that can be leveraged through loans or sales. Despite ranking fourth in the nation for the smallest share of mortgage-free ownership, California’s mortgage-free homeowners control a significant portion of the national housing market.
Overall, the trend of mortgage-free living in California reflects a shift in homeownership patterns and highlights the financial benefits of owning a home free and clear of debt. As the housing market continues to evolve, the prevalence of mortgage-free homeowners may have a lasting impact on the state’s economy and real estate landscape.