What mortgage meltdown?While millions of Americans have suffered the angst of lost homes, equity and pride, nearly a third of the nation's homeowners have no mortgage at all, according to an estimate released Thursday by real estate website Zillow.The free-and-clear class includes, predictably, retirees who have chipped away at their debts for decades, but also a surprisingly high percentage of young people and those who live in relatively affordable regions. In Los Angeles and Orange counties, only 20.7% of homeowners owned their properties outright, reflecting the region's pricey real estate.Economists and housing analysts said that Zillow's estimates are in line with historical norms. But the proportion of these owners is likely to grow as the nation's baby boomers reach retirement. The fact that they can pay cash when they move will make them increasingly important players in a recovering housing market."Those are the people who have the greatest flexibility," said Svenja Gudell, a senior economist with Zillow.As the economy picks up, regions with high percentages of free-and-clear owners probably will get a boost."That means there is a lot more disposable income," said Celia Chen, a housing economist with Moody's Economy.com. "That is positive for the local economy."Out of the nation's largest metro areas, Pittsburgh, Tampa , New York, Cleveland and Miami had the highest percentages of mortgage-free homeowners. Washington, Atlanta, Las Vegas, Denver and Charlotte, N.C., had the lowest.Throughout the Southland, the percentage of mortgage-free homeowners varied little by county. San Bernardino had the lowest percentage of free-and-clear homeowners, at 19.7%, and San Diego had the highest, at 21.5%. That compares with 29.3% nationally — or nearly 21 million homeowners.A big factor in regional variation is median home values, with lower-priced areas not surprisingly having higher outright ownership rates.Zillow also found that the nation's most elderly were the most likely to own their homes, with 77.6% of those 85 and older owning their homes outright, followed by those ages 74 to 84, at about 62.7%. One outlier was those homeowners ages 20 to 24. Out of that relatively young demographic, about 34.5% owned their homes outright. These homeowners could be young millionaires, those with trust funds or those who received help from their parents.People who own their homes outright have always been a significant part of the housing market, said Guy Cecala, publisher of Inside Mortgage Finance. But the recent financial crisis may drive more people toward the financial security of having no house note."Clearly that is going to be a growing trend as our population ages," Cecala said. "The credit crisis has pushed more and more people to think that the best way they can prepare for retirement is with no mortgage at all."Delia Fernandez, a certified financial planner in Los Alamitos, said that even with interest rates so low, those seeking her guidance for retirement often want to pay off debts. And that makes sense, particularly for those nearing retirement."The financial argument has always been to borrow other people's money and invest the rest," she said. But "that higher rate of return is not always guaranteed.… In the meantime, as you get closer and closer to retirement, people want to take on less and less risk."Victor Robinette, a certified financial planner with Raymond James Financial Services Inc. in South Pasadena, said customers have been asking him more often these days about paying off the mortgage."During the boom days, and before, there was hardly any interest in paying off debt because people were so confident that the value of their home was going to go up," Robinette said. "Nowadays, after four or five years of being bruised, people really appreciate the comfort of having the house paid off. And so many people still have concerns about possibly losing their livelihood." ||||| Nearly one in four American homeowners are now underwater on their mortgage. Richard Florida crunches the numbers to find the 20 cities with the biggest debt and housing problems. 
 
 The market for new houses turned down sharply last month, dampening hopes for a rapid recovery. And according to figures released last week, nearly one in four existing American homes is underwater—meaning that their owners owe more on their mortgages than their houses are worth. 
 
 Gallery: Worst Real Estate Cities 
 
 
 
 · Negative equity—percent of mortgages where owners owe more than their homes are worth. 
 
 The worst of the fallout from the burst housing bubble continues to be highly localized. Metros in California, Nevada, and Florida have the most troubled housing markets, according to our new Housing-Mortgage Stress Index. Nearly half of the metros on the list—nine of the top 20, including all five of the top five—are in California: Stockton, Modesto, Vallejo-Fairfield, Riverside-San Bernardino-Ontario, and Bakersfield-Delano, along with Fresno, Visalia-Porterville, Sacramento and Salinas. Six Florida metros make the list—Miami, Orlando, Port St. Lucie, Deltona-Daytona Beach-Ormond Beach, Lakeland-Winter Haven, and Palm Bay-Melbourne. Las Vegas and Reno, Nevada, Phoenix, Provo, Utah, and Greely, Colorado, round out the 20 most stressed housing markets. 
 
 At the height of the boom, real estate, housing, and construction-related industries accounted for more than a quarter of the entire economies of Las Vegas, Miami, and Phoenix and 30 percent of Orlando’s, as I note in The Great Reset. It was like a giant Ponzi scheme, fueled entirely by debt. The hardest-hit Sun Belt metros lacked the underlying economic heft to support their skyrocketing housing values; some of them may never recover. 
 
 If we look at just large metros—those with more than 1 million people—Tampa, Detroit, Atlanta, San Diego, Jacksonville, Washington, D.C., Virginia Beach, Chicago and L.A., show high levels of housing-mortgage stress, along with the five noted above—Riverside, Las Vegas, Orlando, Phoenix, Sacramento, and Miami. 
 
 The Housing-Mortgage Stress Index shows the U.S. metros whose housing markets—and homeowners—face the highest levels of stress and danger of foreclosure and falling prices. The index is based on three variables. 
 
 · Loan-to-value ratio—total Mortgage Debt Outstanding divided by Total Property Value—both from Core Logic. 
 
 • 20 Recession Proof Cities· Monthly mortgage cost-to-income ratio from the U.S. Census American Community Survey. 
 
 The index weights all three variables equally and covers 164 metros. Index values range from 0 on the low end and 1.0 on the high end. 
 
 Charlotta Mellander crunched the numbers, based on data from the American Community Survey and a recent Core Logic report on negative equity for the second quarter of 2010. 
 
 Richard Florida is Director of the University of Toronto’s Martin Prosperity Institute and author of The Great Reset, published this month by Harper Collins. 
 
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– In a country ravaged by the housing crisis, a hefty chunk of homeowners—some 29.3%—have escaped the mortgage burden entirely, a new report by Zillow finds. A great deal of the 20.6 million Americans who own their homes outright are retirees: 77.6% of people 85 and older fully own their abodes, as do 62.7% of people 74 to 84. But plenty of the mortgage-free are also very young: Some 34.5% of homeowners ages 20 to 24 don't have mortgages, the according to Zillow's analysis. The big cities with the highest proportions of homeowners without mortgages are Pittsburgh, Tampa, New York, Cleveland, and Miami, the Los Angeles Times reports. The lowest proportions are found in Washington, Atlanta, Las Vegas, Denver, and Charlotte. Expect more homeowners to be mortgage-free in the future, with baby boomers getting older and the credit crisis driving "more and more people to think that the best way they can prepare for retirement is with no mortgage at all," says an expert.