Mortgage News March 16, 2023
According to a new report by Redfin, the typical American home is bought and sold every 12.3 years, a slight decrease from its peak of 13.4 years in 2020 and 12.9 years in 2021. This number is up from a median of 10 years in 2012 and 6.5 years in 2005.
Various factors contribute to how often homes change hands. One major factor is the aging population, with older Americans choosing to age in place. The share of Americans who are 65 or older has increased to 17%, up from 13% in 2010, and this share is expected to rise as Boomers move into their later years.
The longer home tenure is primarily driven by older homeowners, such as Boomers, who hold onto their houses for an average of 33 years. Nearly 9 out of 10 homeowners between 50-80 years old reported that staying in their homes as they age is important to them.
High home prices and higher-than-average interest rates also contribute to the “lock-in effect,” which keeps people in their current homes longer, especially if they have one of the ultra-low pandemic-era rates. These homeowners avoid taking out another mortgage at a much higher rate. Roughly 85% of mortgage holders have an interest rate far below 6%, disincentivizing them from giving up their comparatively low rate.
Redfin Senior Economist Sheharyar Bokhari stated that although the length of time that Americans are staying in their homes has decreased from its peak in 2020, it is likely to increase again in the coming years. He explained that today’s mortgage rates are more than double the record lows that were reached during the pandemic-induced homebuying frenzy. As a result, homeowners have more incentive to hold onto their homes, even if rates drop to 4% or 5%, which is still much higher than the sub-3% rates that many homeowners currently have. Bokhari called this the “lock-in effect,” which, when combined with older Americans’ desire to stay in their homes, suggests that home tenure will continue to lengthen in the future.
For any questions OR a sample of the records please submit the following form.