Gen X Homeowners Lag Behind in Building Equity
Even as the housing market continues to recover from the Great Recession one cohort of homeowners–Gen X–still bear scars.
A new Home Equity Report from Zillow Inc., Seattle, said Gen X homeowners bore the brunt of the housing crash, and it still shows a decade later as they lag behind in gaining equity in their homes. It notes Millennials have nearly as much equity as the older Gen X homeowners, despite having had much less time to gain equity.
Highlights from the report, with data through the first quarter:
–The median homeowner with a mortgage has $78,683 in home equity. Homeowners who own their homes outright typically have $177,158 in home equity.
–The median homeowner has a loan-to-value ratio of 62.2, or owes 62.2 percent of their home’s current value.
–75.7 percent of homeowners have at least 20 percent equity in their homes, enough to cover the costs of selling or refinancing their home.
–Five percent of mortgaged homeowners are close to owning their homes free and clear.
–10.4 percent of mortgaged homeowners have negative equity. In first quarter 2012, 31.4 percent of homeowners were underwater.
The report said among mortgaged homeowners, the typical millennial (less than 35 years old) owes the bank nearly 76 percent of their home’s current value. The median Gen X (35-50 years old) homeowner owes 70 percent of their home’s value. Boomers (50-65 years old) owe nearly 56 percent of their home’s value, and silent generation (65 and older) homeowners with a mortgage owe 45 percent.
“Roughly half of American wealth is held in home equity,” said Zillow Chief Economist Svenja Gudell. “Paying off the home mortgage is a key step toward retirement for most Americans, and it’s clear from these results that Generation X is further from that goal than older generations because of the Great Recession.”
The good news, Gudell said, is that home values are still growing relatively fast in most places, “building up home equity for homeowners who rely on the investment they’ve made in their home.”
The report noted the difference in how much Gen X homeowners owe on their home loans is an example of how uneven the housing recovery has been across the country. In Baltimore, which has seen a sluggish recovery, Gen X owners with a mortgage owe a median of 79 percent of their homes’ value. In Chicago, where homes are still 15 percent below the highs reached during the bubble, Gen X homeowners owe 77.3 percent of their homes’ value.
Zillow said Gen X homeowners are doing particularly well in the Bay Area, where home values have grown by nearly 75 percent over the past five years. San Jose is the only metro where mortgaged Gen X homeowners owe less than half of their homes’ value, with San Francisco homeowners not far behind, owing 51.4 percent of their homes’ worth.
