Many young people own their homes outright. (Dan Krauss / For The Times…)
Aren’t those young, wealthy homeowners who own their fancy digs mortgage-free the envy of us all?
The real estate website Zillow.com found that about 34.5% of American homeowners aged 20 to 24 owned those properties outright. Real estate agents, in interviews, said these youthful buyers are most likely young millionaires, those with trust funds or those who received help from their parents.
Zillow found that about a third of all American homeowners owned their properties outright.
Out of the nation’s largest metro regions, the Los Angeles metro—which includes Los Angeles and Orange counties—had the 10th-highest percentage of young, free-and-clear homeowners, with 43.2% of those homeowners living mortgage free.
The New York metro area had the highest percentage of young, free-and-clear homeowners, with 84.0% of those homeowners owning their properties with no mortgage, according to the Zillow data. The Detroit region had the second-highest percentage of young mortgage-free owners: 53.9%.
Nick Segal, a real estate agent in Beverly Hills, said the trend of young, wealthy homeowners has emerged in recent years as high-end real estate has looked increasingly attractive to buyers who want to park their cash outside of the stock market or the bank.
“If a parent is making no money in the stock market, and the interest from their bank is virtually nil, then why not put that money into property?” Segal said. “And you can take care of your kid short-term and long-term.”
Ed Kaminsky, a real estate agent with Shorewood Realtors in Manhattan Beach, concurred, saying that he has done more cash deals in the last 24 months than during the first 24 years of his real estate career. A good chunk of the buyers are young and wealthy home shoppers who are either the recipients of trust funds or are getting help from their parents, he said.
Those parents, and young buyers, are motivated to buy as prices have sunk and real estate has reemerged as a secure investment, he said.
“People feel that cash is safe in real estate and maybe not safe in the stock market or even sitting in a bank,” Kaminsky said.
Kaminsky said he recently sold an 18,000 square foot, $6-million home in Austin, Texas, to a wealthy businesswoman who wanted to purchase the property because her daughter was starting as an undergraduate there at the University of Texas.
The free-and-clear class also includes retirees who have chipped away at their debts for decades and those who live in more affordable areas. In Los Angeles and Orange counties, only 20.7% of homeowners owned their properties outright, reflecting the region's pricey real estate. That compares with 29.3% nationally — or nearly 21 million homeowners.
[For the record, 4:34 p.m. Jan. 11: A previous version of this post said the Los Angeles metro region had the seventh-highest percentage of young, mortgage-free homeowners, at 49.2%. In fact, it has the 10th-highest percentage, at 43.2%. The post also said the San Francisco region had the second-highest percentage of such owners, at 53.9%. In fact, those figures describe the Detroit region.]
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