Attom Data Solutions, a Southern California based housing research firm, tells us that today, people living in Southern California who are selling their homes have lived in those homes for an average of 9.4 years. By comparison, in the spring of 2008, the average ownership tenure was 4.6 years. What happened? As a culture, why are we staying put instead of moving on as we used to?
Turns out that several factors are contributing to our longer ownership tenure. One of the biggest factors is historically low inventories of single family homes. Daren Blomquist, a senior vice president for Attom said, “Move-up buyers are staying in their homes longer…and this is creating a logjam of inventory…that (particularly) affects first time home buyers.” In California the average ownership tenure is 9.4 years; in Boston and Hartford, the average is 11.9 years; in Providence, the average tenure is 10.3 years; in San Francisco, the tenure is 9.9 years; in San Jose, the tenure is 9.7 years. And, nation-wide, 71% of people ages 55+ are living in homes they have lived in for 18 years or more. (One quarter of those people have lived in their same home for the past 39 years, according to an analysis of U.S. Census figures.)
Michael Mahon, the president of First Team Real Estate, said, “The one thing we’ve heard consistently is housing affordability. Even when clients have a lot of equity in their homes, homeowners are concerned with how much purchasing power that equity gets them.” Those who are highly motivated to sell know they face a supply shortage when they go to replace their current home, escalating prices due to the short supply, bidding wars and now, another contributing element, rising interest rates.
The days of fixed rates at 3.3% and adjustable rates as low as 2.4% are over, according to Mark Fleming, chief economist with First American Finance Corp. “Sellers face a prisoner’s dilemma…in their own home by their historically low mortgage rate…why move when it will cost more each month to borrow the same amount from the bank?”
Bottom line, Fleming said, “it makes choosing a kitchen renovation (in forever homes) seem much more appealing than moving…”