Decline found in share of homes owned outright

10/14/2005

Nearly 40 percent of all homes in the United States are owned free and clear, according to a new government report, but the same report found that the total mortgage debt in the nation increased by more than 80 percent in a single decade.

The survey, released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, found that 39.4 percent of nearly 83 million residential properties in 2001 had no mortgage. That proportion was a decrease from 40.7 percent of 72 million properties in 1991. In 1981, 42.1 percent of 54 million properties were owned free and clear.

Area lenders said the percentage of home ownership without debt probably is similar in metro Toledo, although the Census report had no numbers for states or cities.

"We have a group of elderly who are selling their homes for whatever reason and a lot of younger people who are creating new debt when they buy those homes," said Michael Rose, executive vice president at Sky Bank.

The report charted mortgage borrowing in the 1990s by interviewing in 2001 a select group of owners of both homes and rental properties, as well as mortgage lenders. It was released last week.

The survey found that between 1991 and 2001, mortgage debt outstanding increased by over 80 percent. The Federal Reserve said such debt has continued to grow, increasing 50 percent between 2001 and the first quarter of 2005.

Total mortgage debt in 2001 was $4.9 billion, compared with $2.7 billion 10 years earlier.

"You're going from zero debt with the old people to the young people, some of whom are borrowing nearly 100 percent with some of the financing programs that are now available," said Mr. Rose.

Ron Patton, vice president of the Toledo Area Community Credit Union, had a different explanation for the nearly 40 percent of owners with no mortgage owed.

"Some of that can be attributed to the fact that people in the last six or seven years have been putting money into real estate rather than the stock market," he said.

"There're a lot of cash transactions to purchase homes these days, more than we really realize."

The survey also found that the refinancing booms of the last decade, as well as frequent moves, mean that 60 percent of all mortgages for single-family houses are less than four years old.

Shane Marzullo, owner of Greentree Mortgage in Maumee, said the percentage of mortgage debt is growing nationally because more people are buying large homes and because attitudes about owing money have changed.

"I'm 35 and we were told as children that you must pay off your house immediately," said the president of the northwest chapter of the Ohio Association of Mortgage Brokers.

"For my parents and grandparents, having a mortgage was the worst thing in the world.

"Now, in my opinion, your mortgage is your biggest tax deduction. I'd be giving money back to the government if I didn't have a write-off."

The survey also found that the majority of the mortgages in the nation have fixed rates, and the most popular term is 30 years.

Contact Mary-Beth McLaughlin at

mmclaughlin@theblade.com

or 419-724-6199.