If life without a house payment is your dream, one-in-five Californians are living it currently.
A report from Building and construction Coverage, a structure market details service, reveals 20.1% of California owners don’t have a home mortgage. Nationally, 26.4% of owners are mortgage-free. Only five states had less: Maryland, lowest at 16.6% then Massachusetts (19.2%), Utah (19.3%), Rhode Island (19.6%) and Colorado (19.7%).
These mortgage-free owners often can neglect certain slices of the economic dispute. Take this pandemic turmoil, for instance. They’re certainly immune to interest rate swings, so cheap money does not affect them. (Unless they pick to do a cash-out refinancing!) They can’t lose their home to the bank if unemployment is high. (Though, real estate tax still must be paid!)
And when numerous indexes or research studies reveal a small fraction of Californians can not “afford” a house, keep in mind that 20% currently own one– without a home mortgage!
Mortgage-free owners are quite different than folks who borrow. Let’s take a look at what Building and construction Coverage found in California compared with the normal American homeowner.
They’re wealthier. You certainly need a decent income to buy. California’s typical family earnings goes from $81,000 for loan-free owners to $121,500 for those with a home mortgage. Nationally? $66,000 (no loan) vs. $99,900 (loan).
More expensive homes. Mortgages permit people to pay more. In California, the typical home value is $450,000 for owners with no home mortgage vs. $535,000 for the mortgaged crowd. Nationally? $170,000 (no loan) vs. $250,000 (loan).
Greater spending. This adds up to bigger typical monthly real estate expenses for borrowers: $653 (no home mortgage) vs. $2,454 (mortgaged) in California. Nationally? $508 (no loan) vs. $1,610 (loan).
Larger chunk to shelter. Look at real estate expenses as a share of earnings. For the mortgaged crowd, Californias put 23.7% of earnings toward real estate vs. 19.7% nationally. For the free-and-clear owners, they’re in fact doing better in California: spending 8.8% of earnings on real estate vs. 9% across the U.S.