In a five-year span, as mortgage rates hit all-time lows and affordability plummeted, the number of Californians with no home loans grew eight times faster than those who borrowed against their properties.
My trusty spreadsheet reviewed fresh Census Bureau data tracking homeownership and mortgages in the 50 states and the District of Columbia for 2024. It contrasted those patterns with 2019 data, before the pandemic upended the economy.
Remember, this five-year period saw mortgage rates — which averaged 7.7% in the past half-century — run below 3.5% for 40% of the time. But owners overall didn’t see low rates as an enticement to borrow. Instead, California’s mortgage-free homes increased by 16% over five years, compared with a 2% uptick among owners with mortgages.
And it’s no California quirk. American homeowners without mortgages also grew by 16%, while those with mortgages increased by 10%.
Various factors power mortgage-free growth across the country.
An aging population is paying off their home loans. A thriftiness movement also nudged some to live debt-free. And relocations from high-cost states to cheaper ones allowed some movers to buy new homes for cash.
Additionally, the reduced tax deductibility of interest expenses made mortgages less desirable. And there are numerous wealthy families with the means to own a home without a mortgage.
Mortgage freedom
Let’s examine the expansion of homeownership without mortgages.
Last year, California had 2.6 million owners without mortgages – 7% of the nation’s 35 million. Only California’s arch rivals had more: Texas at 3.2 million and Florida at 2.7 million.
However, California’s 16% growth in mortgage-free living from 2019 was only the 24th largest jump among the states. That’s nowhere near No. 1 Idaho, at 27%. Texas was No. 21 at 17%, and Florida was No. 13 at 20%.
Mortgage-free living in California is less common than the national norm. California’s median home value of $760,000, the highest in the nation, is clearly an issue.
Last year, 34% of California owners had no mortgage. Only four places had a lower share of loan-free owners: D.C. at 26%, Maryland at 30%, Colorado at 31%, and Utah at 32%.
Nationwide, 40% of U.S. owners are mortgage-free. Texas was No. 13 at 45%, and Florida was No. 15 at 44%.
The popularity of debt-free living surprises me, given the era’s booming home prices.
California home values rose 34% from 2019 to 2024, according to census data. And that was the seventh-smallest gain among the states – roughly half the nation’s 64% jump. Florida was up 62%, while Texas was up 57%.
Despite those price bumps, California’s share of mortgage-free owners increased by 3 percentage points from 2019, when it stood at 31%. Only eight states had more significant jumps.
Nationally, the share of mortgage-free living was up 2 percentage points from 38% five years ago. Texas and Florida rose by less than one point.
Who borrowed?
Californians still borrow for housing, with 5.1 million mortgaged owners last year. That’s No. 1 in the U.S. and 10% of the national total. Next, Texas had 4 million, and Florida had 3.5 million.
But the 2% growth in Golden Staters with home loans over these five years was the 10th slowest among the states. It’s also one-third of the 6% growth nationally.
The U.S. leader was Florida, where mortgaged owners grew 18% in five years, while Texas was up 14%.
It’s not ‘free’
Remember that “no mortgage” doesn’t end ownership expenses. Items such as property taxes, insurance, association fees and upkeep don’t vanish without a home loan.
California’s mortgage-free owners paid a median $882 a month in housing costs last year, the eighth-highest among the states and 40% above the nation’s $628.
New Jersey was ranked No. 1 at $1,236. Texas was No. 18 at $703, and Florida was No. 13 at $766.
These costs in California increased by 42% over the past five years, as insurance and repair costs soared. That’s No. 4 among the states and tops the 28% national increase.
The largest cost hikes were in Nevada and Florida at 50%. Texas was No. 10 at 33%.
And mortgage-free living doesn’t end financial stress.
Across California, 9% of mortgage-free owners had housing costs exceeding 50% of a household’s income – the ninth-highest level of extreme housing burden among the states.
Nationally, it’s 7%. D.C. had the highest level at 11%. Texas ranked 14th at 7%, and Florida ranked 7th at 10%.
Borrowing’s bite
California owners with a mortgage paid a median $3,001 a month last year, the second-highest bite of housing costs among the states. It’s also 65% above the national average of $1,821.
Only D.C. was higher at $3,181. Texas was No. 15 at $2,211, and Florida was No. 16 at $2,168.
Housing cost issues are spreading nationwide.
These monthly expenses in California grew by only 34% in five years. I say “only” because that ranked No. 30 among the states and was a sliver under the nation’s 25% jump.
The largest increases were in Florida, up 42%. Texas was No. 6, up 32%.
These expenses stress many owners with home loans.
Last year, 17% of California homeowners with a mortgage had overall housing costs that accounted for 50% or more of their income, the highest burden in the nation.
Nationwide, only 12% of U.S. owners with a mortgage spend at this stressed level. Florida and Hawaii were No. 2 at 16%. Texas was No. 11 at 12%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com