Look to what your friends are doing these days to get a feel for the latest real estate “trends.” (Look around, real estate agents, as these “trends” are likely your livelihoods.) If your friends are Millennials, they’re likely looking to buy their starter or second home. (One woman told me that she scours MLS listings like she used to scour Vogue.) Gen X’ers are likely to be settling into second or third homes so their families can create roots in their schools and neighborhoods. Some Boomers are looking to either stay put and renovate or downsize. But realize that all the latest “trends” are not absolutes in every local market and, likely, most ” trends”will become past tense in just a year or two…all the more reason for agents to be on the balls of their feet with their eyes open, ready to act and move quickly/buoyantly to and for their individual client’s next “trend.”
One trend being highlighted recently is the average tenure a person lives in their home. It used to be in 2008 that the average amount of time people lived in their homes was 3.5 years, according to Moody’s Analytics and the First American Financial Corporation. Today, that tenure has risen to 8.5 years. (This figure of 8.5 years is the longest tenure rate since this type of data became resourced in 2000.)
An illustrative composite, longer tenured homeowner (let’s call her Jane) is a 59 year old woman who has been living in her two bedroom home for 12 years now. Jane had wanted to upgrade to a three bedroom home some years ago but she lost her job during the recession and decided to hold off. She’s since gotten another job, a better paying one. Though feeling more financially solid, Jane’s decided to “stay put,” do an extensive remodel and add a third bedroom and a work/office space. Anticipated rising interest rates played a big factor in Jane’s decision.
Initially, Jane’s desire to “stay put” grew out of necessity (no job at the time) and/or caution . She simply did not have the wherewithal nor the desire to upgrade to another home. Is Jane our “new normal” homeowner who is staying put? If so, how is Jane impacting the housing market.
- She’s helping to create an historical inventory shortage of homes by not selling hers?
- She’s helping to create a boon to home remodeling/renovating builders and home building supply stores.
- Jane’s home, for as long as she doesn’t sell it , is not creating a commission for real estate brokers.
- She’s helping to create a brutally competitive housing market particularly for first time buyers.
Economists generally anticipate that tenure rates in homes will continue to rise for the next decade. Anticipated rising interest rates will likely play a big role in these projected rising tenure rates, just as they did with Jane. “Once mortgage rates climb to 5-5.5%,” says Zillow’s chief economist, Svenja Gudell, “we’re going to start seeing the “lock in” (staying put) effect really take hold.”
On the other hand, however, Millennials represent one half of the real estate consumer market right now, according to Redfin, and this demographic has its own real estate trend going on. That new normal trend is buying.
Perhaps “new normal” needs to be plural, “new normals.” For real estate agents, plurality is the way to go.