Could you please provide a source for that figure of 40%? It's not what I'm finding.
This is the most mortgage free group: Mortgage Study - Americans Will Carry Mortgage Into Golden Years
Whereas, in 1989, 54 percent of homeowners in the 55 to 64 age cohort were mortgage free, by 1998 that number had declined to 39 percent.
http://www.mortgagenewsdaily.com/292005_Mortgage_Study.asp
And this:
As a result, the ratio of equity to home value continued to fall. At the end of the first quarter of 2007, the ratio of equity to home value stood at 52.7 percent, another record low. This ratio stood at 54.3 percent at the end of 2005. It had been at 57.9 percent as recently as 2000, and was close to 70 percent until the nineties. This drop in the ratio of equity to value is especially disconcerting given the country's demographics. With much of the baby boom cohort at the edge of retirement, it would be expected that the ratio of equity to value would be near record highs. There is reason to believe that the ratio of equity to value will continue to decline for the foreseeable future.
http://www.cepr.net/index.php?option=com_content&task=view&id=1207&Itemid=220
And
According to the Census Bureaus latest American Housing Survey in 2001, about 15.4% of all occupied units had a primary mortgage that was refinanced. The most popular reason for the refinancing was a lower interest rate. But the second most popular reason was to receive cash. The median amount of cash a homeowner gained in refinancing was $24,513. One result of all this borrowing: More than 1 million homeowners now have three or more mortgages on their property. Meantime, over 1.8 million owners have outstanding loans that equal 100% or more the value of their homes.
The average principal amount owed on a mortgage is $69,227. Nearly 14 million homeowners, about 19% of all homeowners in the country, owe more than $100,000.
Number of homeowners with 3+ mortgages 1,008,000
http://moneycentral.msn.com/content/savinganddebt/p70741.asp
Interesting info., AuntB. Doesn't look too good. One thing I don't understand is how so many people in the Los Angeles area can buy homes. Most now in the $500,000 range used to sell for $70,000 in the 70's or 80's. They're just small houses on smallish lots, for the most part (and many now in crappy neighborhoods...once beautiful).