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The new normal: Homeowners aren’t moving

 

NEW YORK – May 15, 2017 – Homeowners are moving less. It's creating a drag on the economy, fewer commissions for real estate brokers, and an extremely competitive market for first-time home shoppers who can't find much for sale.

For many homeowners today, a desire to stay put began out of caution or necessity. Millions of homeowners lost jobs or were stuck in homes that became worth less than they owed the bank. As a result, the median homeownership tenure rose to about 8.5 years in 2015 – up from about 3.5 in 2008. That's the longest tenure since the tracking data began in 2000.

In 2016, it grew even longer as the median length of time people owned their homes rose to 8.7 years in 2016 – more than double what it had been 10 years earlier.

While the economy and housing market have improved as steadily rising home prices free millions of people from the scourge of "underwater" mortgages, economists expect elevated homeownership tenure to continue for the next decade or even longer, even as the reason for longer ownership changes.

While fewer owners are still underwater, interest rates have started going up. Rates for 30-year fixed mortgages were at 4.05 percent last week, after being under 3.5 percent as recently as October. And with the Federal Reserve signaling further interest rate increases, economists expect mortgage rates to head toward 5 percent by the end of the year.

The higher that rates climb, the more tempting it becomes for people to stay in place.

Source: Wall Street Journal (05/15/17) Dougherty, Conor

© Copyright 2017 INFORMATION INC., Bethesda, MD (301) 215-4688

 

Related Topics: Trends