Americans are staying in their homes twice as long as they were 20 years ago, and older generations have less incentive to sell or move, according to a new report.
average US homeowners spent just under 12 years in their homesThat’s up from 6.5 years 20 years ago, according to real estate brokerage Redfin. The length of time homeowners stay in their homes has fallen from a peak of around 14 years in 2020, but many of the incentives that encourage people to move have since leveled off.
Other economic indicators suggest the same: U.S. Existing home sales hit a 30-year low last yearThat’s because homeowners are still stuck with low mortgage rates, according to the National Association of Realtors.
This trend is most prevalent among baby boomers, many of whom are retiring. Interest rates and home prices continue to rise. The lock-in effect is geographically widespread, with affordable metros seeing housing turnover in just seven years.
Mark Parim, Fannie Mae’s vice president and deputy chief economist, told Yahoo Finance that “the lock-in effect…is becoming a significant issue among people who say they want to stay home longer than expected.” Ta. “I don’t know if there’s a magical inflection point, but I think it’s not just the passage of time or the interest rates themselves.”
read more: With mortgage rates hovering around 7%, is it a good time to buy a home?
Almost half of baby boomers have lived at home for 20 years
Most baby boomers haven’t moved in decades, and that won’t change anytime soon.
Almost 40% of people born between 1946 and 1964 have lived at home for at least 20 years. According to Redfin research, another 16% have lived in the property for 10 to 19 years.
For Gen Xers, more than a third have lived in the same home for at least 10 years.
By comparison, Millennials stayed at home for less time, primarily because they are more likely than older generations to change jobs or grow families.
According to Redfin, less than 7% of Millennials born between 1981 and 1996 have lived in their home for more than 10 years, and less than 30% have lived in their home less than 5 years.
“Longer homeownership periods, especially among baby boomers, are creating a barrier for young first-time buyers looking to enter the market,” the report said.
Overall, nearly 80% of baby boomers and 72% of Gen
This imbalance means that younger generations looking to enter the market find virtually no inventory of affordable existing homes.
Another Redfin analysis found: Empty nest baby boomers own 3 out of 10 large homes in the UStwice as many as Millennials with children.
Many Millennials who were not homeowners rented or lived with their parents, further evidence that older generations maintain control over housing.
“Americans, especially younger people, are only renters because they move from one place to another as renters,” Lawrence Yun, NAR’s chief economist, told reporters this week.
read more: First-time home buyers in 2024: What you need to know
Reasons why baby boomers don’t give up their homes
Baby boomers don’t move quickly because they have no reason to do so.
Approximately 54% of baby boomers who own homes do not have a mortgage. This means they own the property freely and clearly. The group’s median monthly homeownership costs, including insurance and property taxes, averaged $612 as of January 2024.
Most baby boomers with mortgages have low interest rates compared to today’s nearly 7% interest rates. Additionally, Redfin noted that some states’ tax policies benefit people who stay in their homes longer.
For example, in Texas, homeowners age 65 and older can defer property taxes until the home is sold. California strictly limits annual property tax increases.
“Baby boomers have little incentive, financial or otherwise, to sell,” Sheharyar Bokhari, a senior economist at Redfin, wrote in the study. “They typically have lower housing costs, and the majority of baby boomers are still in their 60s, so they’re still young enough to be able to take care of themselves and their homes without assistance.”
Having a fixed income and stricter lending standards may be another factor in baby boomers choosing to age.
median price of Previously owned home was valued at $379,100 January was the highest on record, NAR reported Thursday. The measure outpaced wage growth for the first time in 14 months, hitting not only affordability for first-time buyers but also potential repeat buyers.
Darryl Fairweather, Redfin’s chief economist, told Yahoo Finance: “From my perspective, bonds are more about people who can’t afford to move, or who can’t find good, affordable options to move to. “I would classify it into broad categories,” he said. “At the end of the day, it all boils down to housing affordability.”
where people stay
Homeowners across the country are choosing to live in a location for an extended period of time, but the West Coast has led this trend.
The average homeowner in Los Angeles has lived in their home for about 19 years, followed by San Jose, California, for about 18 years. This is followed by Cleveland, Ohio (almost 18 years), San Francisco (almost 17 years), and Memphis, Tennessee. (16-1/2). Californians had a huge incentive not to move. That’s partly because state law prohibits large increases in property tax assessments for existing homeowners.
The regions with the most home sales were primarily in the affordable metros in the South.
Homeowners lived in their homes the least amount of time in Louisville, Kentucky (just over seven years) and in Las Vegas, it was just eight years. Next was Nashville, Tennessee, Charlotte, North Carolina, and Raleigh, North Carolina, each with a median tenure of eight and a half years.
“We expect homeowner tenure to remain flat or increase slightly in the near term,” Redfin researchers wrote. “Sales should pick up a bit this year, but it will be more of a trickle than a flood.”
Gabriela Cruz Martinez I’m a personal finance and housing reporter for Yahoo Finance. Follow her on X @__Gabriela Cruz.
