The recent economic shutdown resulted in record unemployment and left millions of Americans struggling financially. Even as all 50 states have started reopening, the economy has a long road ahead to full recovery. Housing costs are often the biggest line item for most people’s budgets, and the current economic downturn has made it difficult for many people to pay their mortgages. Americans who own their homes outright are less vulnerable during recessions compared to those households with large mortgages. 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.
Mortgage delinquencies tend to rise significantly during recessions. According to quarterly data from the Federal Reserve Bank of New York, the delinquency rate on mortgages peaked at over 8 percent during the Great Recession and declined to below 1 percent in 2019. Data for Q1 2020, shows the start of what’s expected to be a significant increase in mortgage delinquencies this year.
More granular, monthly data from Black Knight, a real estate technology company, indicates that the national delinquency rate nearly doubled between March and April of this year, the largest single-month increase ever recorded.
As expected, monthly housing costs between homeowners with and without mortgages differ considerably. Census Bureau data shows that the median monthly housing cost—including mortgage payments, insurance, and utilities—for homeowners under age 65 with a mortgage was $1,610 in 2018. This figure was just $508 per month for homeowners under age 65 without a mortgage.
In addition to higher monthly housing costs, homeowners under age 65 with a mortgage tend to have higher household incomes. Among households with a mortgage, the median income is just under $100,000, compared to $66,000 for those households without a mortgage.
To find the locations with the most residents who have paid off their homes, researchers at Construction Coverage, a review site for HELOCs and builders risk insurance, analyzed the latest data from the U.S. Census Bureau. The researchers ranked states according to the share of owner-occupied homes that are owned free and clear. Researchers also calculated the median home value, median household income, median monthly housing costs, and housing costs as a percentage of income for households with and without a mortgage. For the purpose of this analysis, only households with homeowners under age 65 were included.
The analysis found that in Oregon, 23.3% of homeowners own their homes free and clear. Here is a summary of the data for Oregon:
- Share of owner-occupied homes that are paid of: 23.3%
- Median home value: $300,000 (w/o mortgage), $350,000 (w/ mortgage)
- Median household income: $70,000 (w/o mortgage), $101,600 (w/ mortgage)
- Median monthly housing costs: $538 (w/o mortgage), $1,780 (w/ mortgage)
- Housing costs as a share of income: 8.4% (w/o mortgage), 20.7% (w/ mortgage)
For reference, here are the statistics for the entire United States:
- Share of owner-occupied homes that are paid of: 26.4%
- Median home value: $170,000 (w/o mortgage), $250,000 (w/ mortgage)
- Median household income: $66,000 (w/o mortgage), $99,900 (w/ mortgage)
- Median monthly housing costs: $508 (w/o mortgage), $1,610 (w/ mortgage)
- Housing costs as a share of income: 9.0% (w/o mortgage), 19.7% (w/ mortgage)
For more information, a detailed methodology, and complete results, you can find the original report on Construction Coverage’s website: https://constructioncoverage.