Mortgage-Free America? Why Homes Today are Equity Rich and What It Means For Investors
Summary
This article discusses the increasing number of mortgage-free homeowners in the U.S. and its potential impact on the housing market and real estate investing. Hosts can consider leveraging their home equity via various strategies, like short-term rentals, and flippers may find opportunities in a market with fewer motivated sellers.
Key Insights
- •Over 40% of American homeowners are mortgage-free, a record high. The greatest concentration is in the South and Midwest, while fast-growing cities have the fewest.
- •U.S. property turnover is at an all-time low. Older homeowners are less likely to sell, creating less mobility.
- •Homeowners with mortgages have about $302,000 in equity as of Q1 2025. Roughly $195,000 is 'tappable' (available for withdrawal while maintaining 20% equity).
Action Items
- ✓Consider leveraging home equity with a HELOC to purchase a vacation property and rent it out via short-term rental.Effort: mediumImpact: medium
- ✓If you have the know-how, consider flipping homes, using your cash to sidestep hard-money lenders.Effort: mediumImpact: medium
- ✓Explore adding an ADU for extra income, or living in your ADU and renting out your primary residence to accelerate loan repayment.Effort: mediumImpact: medium
Tools & Resources
- →Cotality: According to property data analyst Cotality
- →ICE Mortgage Monitor: The Intercontinental Exchange (ICE) Mortgage Monitor report
Watch Out For
- ⚠Tapping into equity should not be taken lightly, considering the rising costs of food, energy, and insurance.
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