Record home values are the one bright spot for Gen Xers still behind in the race for home equity

Gen Xers stuck between retiring boomers ahead of them and millennials coming up from behind have yet another woe to grouse about in the generational sandwich: The recession struck their home equity balance the hardest.

The housing crash is a decade in the rearview, but homeowners ages 35 to 50 continue to lag in the race to gain equity in their homes — owing 70 percent of their home’s value. This is according to a new report from Zillow that tracked the home equity of more than 50 million homeowners with a mortgage and parsed the numbers by generation and location.

Not surprisingly, baby boomers and the silent generation — your great-grandparents — have fared the best, owing on average 56 percent and 45 percent on their mortgages respectively.

Meanwhile, the under-35 set, millennials, have already amassed nearly the same amount of equity as Gen Xers. Despite having less time to do it, millennials typically owe about 76 percent of their mortgage.

The one bit of good news for Gen X owners, and really all homeowners, is that home values have hit a never-before-seen high with the typical home in the U.S. now worth more than $200,000, Zillow reported in its June Real Estate Market Reports.

That median price is up 7.4 percent from this time last year and is notably higher than prices were at the height of the housing bubble when value peaked at $196,000.

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“Roughly half of American wealth is held in home equity,” says 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 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.”

Only about 5 percent of people with mortgages are close to owning their home outright, while the typical homeowner has more than $78,000 in equity and owes about 62 percent of their home’s current value.

Still, about 10 percent of homeowners with a mortgage are underwater, an improvement over 2012 when about one in every three owed more than the home’s value.

If you don’t own a home, it’s tougher to find one. Zillow reports 11 percent fewer homes are on the market than a year ago. That coupled with high demand is the force driving up prices nationally, but some markets are hotter than others. 

“The national housing market remains red hot and shows no signs of slowing, even as some local markets like the Bay Area have noticeably cooled,” says Gudell. “But even in areas where the housing market has slowed, home values are at or very near peak levels, selection is limited, demand is high and competition is fierce.”

And where value is rising faster, so too is the home equity for owners in those regions.

So it follows that Zillow reports, “Gen X homeowners are doing particularly well in the Bay Area where home values have grown 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, and San Francisco homeowners are not far behind, owing 51.4 percent of their homes’ worth.”

On the flip side, a sluggish recovery in Baltimore has left the typical Gen Xer with a mortgage, owing 79 percent of their home’s value.

While home values are stampeding to new heights, rents across the county have hit a median of about $1,422 per month. That’s about 1 percent more than this time last year. But it too shows a lot of variation from city to city, with rents in Seattle, Los Angeles and Sacramento, California increasing up to 5 percent while rents fell in 12 of the country’s 35 largest metro areas, including San Jose, California, San Francisco and Miami.

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Baby Boomers, homebuyers, homeowners, millennials, mortgages

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Article last modified on August 9, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Gen Xers Have Owned Homes Longer — Yet Owe Slightly Less Than Millennials - AMP.