With all the news regarding mortgages, Fannie Mae and Freddie Mac, a recently-released 2009 American Housing Survey (AHS) shows data for homeowners who own their property without a mortgage in the Chicago Metropolitan area.
Image by Kate Kunz/Corbis
According to the AHS survey, which YoChicago.com and the Chicago Tribune reported about, 25 percent of homeowners own their property without a mortgage. The rate of mortgage-free ownership is higher than average among seniors (64 percent), African Americans (33 percent), people living below the poverty level (46 percent), city of Chicago homeowners (34 percent) and suburban Cook County homeowners (30 percent).
Only 9.5 percent of homes built within the past four years were mortgage-free at the time of the survey. The mortgage-free ownership rate was at 2.4 percent for owners who had purchased within the previous year.
What does some of this data mean for the mortgage and lending industry? “New buyers tend to use mortgages as an important portion of their purchase price,” says Charles H. Wurtzebach, Ph.D., a George L. Ruff visiting professor in real estate studies at De Paul University. “Mortgage interest rates have been at a historic low, attracting more borrowers. So in order for the mortgage lenders to recover significantly, home purchases need to increase.”
In addition, baby boomers are an important piece to the housing market puzzle. “As the baby boomers continue to retire in record numbers – one estimate suggests that 10,000 baby boomers retire every day – the number who own their homes mortgage-free will rise,” Wurtzebach says. “The boomers will continue to have a significant impact on the home ownership market.”
He adds that with low housing prices now, there will be a lot of movement from boomers as they sell their larger houses and retire into smaller ones.