Zillow, which typically analyzes negative home equity, switched gears this time to look at the share of homeowners with no mortgage. This is an important indicator because it points out a group of homeowners who may be more flexible than people with mortgages in putting their homes on the market, said Stan Humphries, chief economist at Zillow.
“By determining where these homeowners are located, we can also gain insight into potential inventory and demand in those areas,” Humphries said….
Several factors help explain an area’s mortgage-free rate. Obvious ones include the median age of homeowners: People 65 to 74 are the most likely to have no home-loan debt because they’ve had enough time to pay off their mortgages.
Even if every local agent/broker went door-to-door in their older “farm areas” to assess how many senior-citizens wanted to sell, I don’t see them getting very many listings, if any at all.
Most will never sell … they will simply leave the property to their estate, so their heir(s) can decide if they want to keep it “in the family” (individually or collectively) and thus inherit the old, low assessment.
As long as Props 58/193 remain “on the books” in CA, the bulk of these properties won’t change hands (out of the family).
I really don’t see a lot of current “demand” for these properties, anyway … at least not in the areas more than 2 mi from the beach.
The current “family-raising” set of buyers doesn’t want them. Largish lot aside, the floor plans of these seniors’ houses don’t necessarily “flow” and most have “dated” features.
The younger set would rather line up to bid on the over-taxed, over-indebted properties situated on miniscule lots.
I’m not trying to be facetious here. It’s the truth :=0
However, the Zillow analysis also showed that nearly 35 percent of homeowners nationwide in the 20-24 category had no mortgage. The share in San Diego County is 42 percent.
Housing analysts said parents with enough means are likely helping these young adults take advantage of relatively low housing prices. They may be giving money or extending private loans to their children.
Of course, the “20-24 year-old” set is too young to have graduated from college and become established in a career. Obviously, parents/grandparents are paying cash for homes and then deeding them to their children. Or giving them a long-owned home that used to be one of their rentals. Even if the parents are extending “private loans” to their children, their lawyers would advise them to file trust deeds on those loans. Since there were no TD’s recorded in the UT survey, then they were all-cash sales or intra-family transfers. And trust me when I say that parents who can afford to do this have lawyers chained to their ankles 🙂
The share of kids whose parents bought them a home in SD is higher because they are more unaffordable here than other parts of the nation. Local parents could have also deeded their kids a SFR or condo to live in while attending college so they would be less inclined to leave the area after graduation in search of work ;=]
In decades past and currently in the “flyover states,” it was/is not uncommon for 20-24 year-olds to purchase their first home (yes, even in SD). But the type of homes they purchase(d) on their own are NOT what the typical families headed by a Gen Y would want to live in today, NOR were/are they located in areas that this buyer-group would be even remotely interested in.
Sorry if I sound like a broken record. I don’t hate Gen Y. My kids are Gen Y :=D
