Almost 40% of homes in the U.S. are mortgage-free

Zillow data reveals growing percentage of "free and clear" homes

The percentage of homes in the U.S. that are not financed by a mortgage is increasing, according to recent data from Zillow, which reveals that 37% of homes in 2017 were “free and clear.”

Zillow's data illustrates a gradual rise of mortgage-free homes since 2006, with the percentage increasing 5.5 points in 11 years.

Zillow Economist Jeff Tucker said changes in homeowner demographics are the driving factor behind this trend.

“The biggest factor behind the rise in mortgage-free homes is the aging composition of homeowners,” Tucker said. “Young people saw their homeownership rates fall the most during and after the real estate crash, and so the median ages of homeowners as well as first-time homebuyers have risen since then.”

But Tucker predicts this trend will “level and gradually reverse” because of two major events that are sure to impact the housing market: A large number of Baby Boomers will age out of homeownership, and a large number of Millennials will become homeowners.

“So, for several years, many more home sellers will be established older households without mortgages, while a growing share will be younger households buying their first homes, of whom the vast majority will take out mortgages,” Tucker said.

The percentage of free and clear homes by state also highlights geographic differences in home prices, as states with lower home prices have a greater number of homes that are free of a mortgage.

West Virginia takes the top slot with 54% of mortgage-free homes, followed by Mississippi at 51% and Louisiana at 48%. 

Conversely, the states with the lowest rates of mortgage-free homes have home price and demographic trends in common.

“The states with the lowest rates are places with either less affordable homes, more young households relative to old ones, or both, like Washington, D.C., Maryland, Colorado, Utah and California,” Tucker said.


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