Jan 13, 2024 - Real Estate

Nearly 31% of Twin Cities homes are mortgage-free

Data: Census Bureau; Note: Data unavailable in 2020; Chart: Axios Visuals

There's a growing share of Twin Cities homes without mortgages.

Why it matters: This is a group of homeowners who aren't worrying about high mortgage rates.

By the numbers: 30.9% of Twin Cities metro-area homes were owned outright in 2022, up from 27.7% in 2017, according to the latest census data.

Between the lines: Many free-and-clear owners are baby boomers who refinanced their mortgages when rates were lower, Bloomberg reports.

Zoom in: Savings from multiple refinances allowed Twin Cities homeowner Thom Schubbe and his wife to chisel down their mortgage debt and then buy a cabin.

  • That property is almost paid off, too. "If you stick with it, you'll get a low rate," he tells Axios.

Be smart: "If people derive some intrinsic happiness out of paying off their mortgage because it reduces their stress, then that has value," Michael Roberts, a Wharton School finance professor, tells Bloomberg.

  • There can be a psychological perk to paying off a loan early, but according to some personal finance experts, it could be smarter to invest that money instead.

The big picture: Mortgage-free doesn't mean expense-free. Hutchinson homeowner Terri Lynaugh says about half of her former house payment goes toward taxes and home insurance.

  • "My husband says that even if you officially 'own' your home, do you really? Thinking that the city will always be involved in it with taxes."

Yes, but: Freedom from mortgage debt can unlock more money to spend on travel, family members or home improvements.

  • Eden Prairie homeowner Barbara Buehl and her husband have renovated their kitchen, installed hardwood floors and replaced their back deck with a three-season porch, among other updates since paying off their mortgage.
  • Northeast Minneapolis homeowner Andrew Stelk's mortgage payments now go toward his daughter's college tuition and housing.

What we're watching: Mortgage-rate humble brags. Forecasts predict rates will dip through 2024, but those 3%-ers likely got the interest rate of a lifetime.

Go deeper: Mortgages dip below 7% after the Fed hints at rate cuts

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