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Despite experiencing the fastest Fed rate hike cycle in four decades, the U.S. economy has proven more resilient than in past economic cycles. One reason some economists believe this resilience exists is the greater buffering homeowners now have from spiked interest rates: Not only is 96% of mortgage debt in the U.S. fixed rate, but 38.5% of homeowners don’t have a mortgage at all.
Unlike their homeowner counterparts in countries like the United Kingdom and Canada, the vast majority of U.S. homeowners aren’t seeing their payments adjusted to the new market rates. Additionally, the fact that many U.S. homeowners have no debt at all means that if they need to sell and buy a different home, they might be able to roll over the equity, buy it in all cash, avoid spiked interest rates, and avoid having to cut back on their discretionary spending, thus keeping the economy warmer.
To explore the regions with the highest percentage of mortgage-free homeowners in the U.S. and track changes in the proportion of homes without mortgages over time, ResiClub analyzed data from the U.S. Census Bureau.
Between 2010 and 2022, the share of owner-occupied homes without a mortgage jumped from 32.1% to 38.5%.
Why did the number increase so much?
It boils down to the fact that older homeowners tend to be the ones with paid-off mortgages, and over the past decade, the U.S. population has aged as the massive baby boomer generation has entered its senior years. Indeed, over half of mortgage-free homeowners are baby boomers.
On a regional level, regions with greater affordability and areas with a higher proportion of older populations tend to have a higher percentage of homeowners without mortgages.
In West Virginia (53.3%) and Mississippi (50.1%), over half of owner-occupied housing units are mortgage-free. In contrast, states like Maryland (28.2%) and Colorado (29.8%) have less than 30% of owner-occupied housing units without mortgages. On a county level, Texas appears to have a higher concentration of mortgage-free housing units, with 18 of its counties among the top 50 U.S. counties with the highest percentage of owner-occupied homes without a mortgage.
Click here to view an interactive version of the map below.
Since 2022, all-cash home buying, as a percentage of home sales, has increased, as many of these mortgage-free homeowners carried over equity to avoid taking on these higher rates.
In Q1 2022, 25.8% of home purchases were made in “all cash,” according to Parcel Labs. In Q4 2023, 33.5% of home purchases were made in “all cash.”