Pittsburgh leads U.S. in free-and-clear homeowners
What mortgage meltdown?
While millions of Americans have suffered the angst of lost homes, equity and pride, nearly a third of the nation's homeowners have no mortgage at all, according to an estimate released on Thursday by real estate website Zillow.
And Pittsburgh leads the nation with the highest percentage of home-owners who own their homes free and clear.
The local rate at the end of September was 38.6 percent, according to Zillow, a national real estate information database.
Zillow found 20.6 million homeowners — or 29.3 percent — in that category nationwide, with Tampasecond-best at 33.2 percent. Philadelphia has a 27.6 percent rate; Cleveland, 29.4 percent; Columbus, 21.7 percent; and Cincinnati, 23.7 percent.
The free-and-clear class includes, predictably, retirees who have chipped away at their debt for decades, a surprisingly high percentage of young people and homeowners who live in relatively affordable regions.
Economists and housing analysts said that Zillow's estimates are in line with historical norms. The proportion of these owners is likely to grow as baby boomers reach retirement. The fact that they can pay cash when they move will make them increasingly important players in a recovering housing market.
“Those are the people who have the greatest flexibility,” said Svenja Gudell, a senior economist with Zillow.
As the economy picks up, regions with high percentages of free-and-clear owners probably will get a boost.
“That means there is a lot more disposable income,” said Celia Chen, a housing economist with Moody's Economy.com. “That is positive for the local economy.”
According to Zillow, 36.2 percent of Allegheny County homeowners have no mortgage to pay. In Westmoreland County, the figure is 40.9 percent and in Washington County, 39.5 percent. In other counties, Fayette has the highest percentage at 49.4 percent, followed by Armstrong with 47.9 percent, Beaver with 39.4 percent and Butler with 35.7 percent.
Out of the nation's largest metro areas, Washington, Atlanta, Las Vegas, Denver and Charlotte had the lowest percentage.
A big factor in regional variation is median home values, with lower-priced areas having higher rates of outright ownership.
Zillow found that the most elderly were the most likely to own their homes. One outlier was homeowners ages 20 to 24. Out of that relatively young demographic, about 34.5 percent owned their homes outright. Those homeowners could be young millionaires, those with trust funds or those who received help from their parents.
People who own their homes outright have always been a significant part of the housing market, said Guy Cecala, publisher of Inside Mortgage Finance. But the recent financial crisis may drive more people toward the financial security of having no house note.
“Clearly, that is going to be a growing trend as our population ages,” Cecala said. “The credit crisis has pushed more and more people to think that the best way they can prepare for retirement is with no mortgage at all.”
Delia Fernandez, a certified financial planner in Los Alamitos, Calif., said that even with low interest rates, those seeking her guidance for retirement often want to pay off debts. And that makes sense, particularly for those nearing retirement.
“The financial argument has always been to borrow other people's money and invest the rest,” she said. But “that higher rate of return is not always guaranteed. In the meantime, as you get closer and closer to retirement, people want to take on less and less risk.”
Victor Robinette, a certified financial planner with Raymond James Financial Services Inc. in South Pasadena, Calif., said customers have been asking him more often these days about paying off the mortgage.
“During the boom days and before, there was hardly any interest in paying off debt because people were so confident that the value of their home was going to go up,” Robinette said. “Nowadays, after four or five years of being bruised, people really appreciate the comfort of having the house paid off. And so many people still have concerns about possibly losing their livelihood.”
The Los Angeles Times and Trib Total Media staff writer Sam Spatter contributed to this report. He can be reached at 412-320-7843 or email@example.com.