(March 4): American homeowners are staying put, a trend that’s helping drive home prices out of reach for many.
The typical homeowner has stayed in their home for 12 years as of December — nearly double the median tenure of two decades ago, according to a new report from brokerage Redfin. Keeping owners in place are high costs associated with borrowing and moving, as well as accumulated wealth in their existing homes.
Homeowner tenure peaked at about 13 years in 2020, when the Covid-19 pandemic kept Americans at home. Since then, a buying frenzy sparked by low interest rates and flexible-work policies brought that figure down before it rose again last year.
The data reflect one of the ways that life has fallen into a holding pattern for many. Americans are also staying in their jobs for longer and moving for new opportunities less often, limited in part by the low-hire economy.
For many homeowners, the cost of downsizing or relocating has grown too expensive. A lack of available housing has driven prices to record highs but homeowners have little motivation to sell because so many are locked into low mortgage rates that they’re unwilling to give up. Demographics also play a part, with empty-nesters holding onto large houses that might otherwise go to young families.
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“High mortgage rates and home prices perpetuate a cycle that locks up housing inventory,” said Chen Zhao, Redfin’s head of economics research. “It can keep existing homeowners in place and financially discourage them from moving to a different home or a different neighbourhood, which drives prices up even higher for first-timers trying to break into the market.”
Homeowners in California’s major metropolitan areas stayed put the longest, largely because of state laws that let them keep relatively low property-tax bills until they sell. Los Angeles homeowners settle in for 20 years — the longest span in the nation, followed by San Jose, according to Redfin’s analysis.
The shortest tenure was in Louisville, Kentucky where the typical owner sells after 8.3 years, followed by Las Vegas, Charlotte, North Carolina and Orlando.
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With 30-year fixed rates recently falling below 6%, more homeowners may be persuaded to list. But seven out of 10 mortgage borrowers are locked into rates below 5%, according to data provider Intercontinental Exchange Inc.
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