Boomers own the most homes in America. Here’s why

November 16, 2021

Mortgages are the largest debt owned by many Americans, which is why it’s often recommended that homeowners pay off their balances before they retire. That way, homeowners will have more money freed up and less debt to worry about in retirement.

But paying off a mortgage before reaching retirement age isn’t feasible for everyone. In fact, across the country, nearly 10 million homeowners paying off their mortgage are 65 and older.

To better understand where homeowners are likely to still be paying off their mortgage once they’re near or past retirement age, LendingTree used U.S. Census Bureau data to look at the share of homeowners who are 65 and older and still have a mortgage in each of the nation’s 50 largest metropolitan areas.

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We found across these 50 metros that an average of nearly 19% of homeowners who are 65 and older still have a mortgage. Beyond that, we also found that homes owned by people in this age group tend to be less valuable than those owned by the general population — and that their monthly housing costs tend to be lower.

Key findings

Miami, Los Angeles and Sacramento, Calif., have the largest share of 65-and-older homeowners with a mortgage. Across these three metros, an average of nearly a quarter — 23.64% — of homeowners 65 and older have a mortgage. That’s about five percentage points higher than the 50-metro average of 18.91%.
Three Texas metros — Houston, Austin and Dallas — are where the smallest share of homeowners who have a mortgage and who are at least 65 reside. An average of only 13.71% of homeowners who are 65 and older have a mortgage in these metros.
Typically, the homes owned by those 65 and older are worth less than those owned by the general population. Across the nation’s 50 largest metros, older homeowners’ homes are worth an average of $10,626 less than homes owned by the general population. That being said, the disparity in value varies by metro, and there are a handful of areas where homes owned by older people are worth more than those owned by the overall population.
Even if they’re still paying off their mortgage, older homeowners usually have lower housing costs. Across the nation’s 50 largest metros, the average total monthly housing costs for 65-and-older homeowners with a mortgage are $268 less than they are for the general population.

Metros with the largest share of 65-and-older homeowners

No. 1: Miami

Share of 65-and-older homeowners: 24.25%
Median value of homes owned and occupied by those 65 and older: $289,900
Median value of all owner-occupied housing units: $315,400
Median monthly housing costs for homes with a mortgage owned and occupied by those 65 and older: $1,568
Median monthly housing costs for all owner-occupied housing units with a mortgage: $1,874

No. 2: Los Angeles

Share of 65-and-older homeowners: 23.50%
Median value of homes owned and occupied by those 65 and older: $669,400
Median value of all owner-occupied housing units: $666,900
Median monthly housing costs for homes with a mortgage owned and occupied by those 65 and older: $2,223
Median monthly housing costs for all owner-occupied housing units with a mortgage: $2,659

No. 3: Sacramento, Calif.

Share of 65-and-older homeowners: 23.15%
Median value of homes owned and occupied by those 65 and older: $416,300
Median value of all owner-occupied housing units: $434,400
Median monthly housing costs for homes with a mortgage owned and occupied by those 65 and older: $1,813
Median monthly housing costs for all owner-occupied housing units with a mortgage: $2,143

Metros with the smallest share of 65-and-older homeowners

No. 1: Houston

Share of 65-and-older homeowners: 13.20%
Median value of homes owned and occupied by those 65 and older: $202,300
Median value of all owner-occupied housing units: $219,100
Median monthly housing costs for homes with a mortgage owned and occupied by those 65 and older: $1,463
Median monthly housing costs for all owner-occupied housing units with a mortgage: $1,815

No. 2: Austin, Texas

Share of 65-and-older homeowners: 13.85%
Median value of homes owned and occupied by those 65 and older: $328,600
Median value of all owner-occupied housing units: $318,400
Median monthly housing costs for homes with a mortgage owned and occupied by those 65 and older: $1,689
Median monthly housing costs for all owner-occupied housing units with a mortgage: $1,992

No. 3: Dallas

Share of 65-and-older homeowners: 14.07%
Median value of homes owned and occupied by those 65 and older: $235,100
Median value of all owner-occupied housing units: $253,900
Median monthly housing costs for homes with a mortgage owned and occupied by those 65 and older: $1,564
Median monthly housing costs for all owner-occupied housing units with a mortgage: $1,870

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Getting a mortgage later in life isn’t necessarily a bad idea

As would-be homeowners age, there are various reasons why many might second-guess getting a mortgage, especially if they’re worried they’ll be paying off their loan into their late 60s or beyond.

Some older buyers might be concerned they won’t be able to keep up with their monthly mortgage payments once they retire, while others might worry that they’ll die before they finish paying off their loan and end up saddling their family with leftover debt.

Though these concerns can be valid, that doesn’t mean that older people thinking about buying a home should necessarily shy away from getting a new mortgage — especially if they wouldn’t be able to afford a home without one.

In fact, those who get a mortgage later in life might be in a better position to handle their debt than someone younger. This is because older Americans generally have better credit score s and more cash at their disposal than younger Americans.

Because people with stronger credit scores and more cash that can be used for a down payment tend to end up with better rates and smaller monthly payments than those with less cash or worse credit scores, older Americans who get a mortgage could find that paying off their loan isn’t as challenging as they feared.

Of course, income tends to drop when a person retires, but many thinking about getting a new mortgage in their 50s or 60 might find that they’re still more than capable of managing their debt even as they grow older.

Tips for getting and paying off a mortgage when you’re older

Older Americans thinking about applying for a mortgage should keep the following tips in mind to help ensure that they qualify for a loan and keep on top of their new debt.

Consider a retirement mortgage. As the name implies, retirement mortgages are loans that can help older homebuyers no longer in the workforce purchase a home. Because these types of mortgages don’t have the same income standards that traditional loans do, some older buyers might find qualifying for one easier than they would a traditional loan.
Try to avoid taking out a massive loan. Though managing a mortgage after retiring is certainly possible, it’s especially important for older homeowners not to bite off more than they can chew. The smaller their loan, the less money they’ll need to allocate each month toward paying it off and the more money they’ll have left over for other expenses.
Shop around before buying. Because different lenders can offer different rates, even to those with the same financial profiles, shopping around for a mortgage before buying a home is generally a good idea. Shopping around could increase an older homebuyer’s chances of finding a lender willing to work with them and help them secure a lower rate.

Methodology

Data in this study is derived on the metropolitan statistical area (MSA) level from the U.S. Census Bureau’s 2019 American Community Survey — the latest available.

Because of how the Census Bureau organizes its data, LendingTree focused on homeowners 65 and older, even though 65 is technically below the current minimum full retirement age in the U.S. of either 66 or 67 depending on the year the person was born.

This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.