According to a new report from Redfin, the typical home is bought and sold every 12.3 years, a number that is down from a peak of 13.4 years in 2020 and 12.9 years in 2021. This is also up from a median of 10 years in 2012 and 6.5 years in 2005.
So, what is causing this? According to Redfin, this data sits at a market confluence where many different variables contribute to how often homes change hands.
A major factor in this is that the general population is aging, and older Americans are choosing to age in place. Roughly 17% of Americans are 65 or older, up from 13% in 2010, and the share is expected to increase as Boomers move into the later years of their lives.
Longer home tenure is mostly driven by older homeowners, like Boomers who hold on to their houses for an average of 33 years; nearly 9-in-10 homeowners between 50-80 years old reported that staying in their home as they age is important to them.
Another contributing factor is high home prices and higher-than-average interest rates which contributes 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—so they can avoid taking out another mortgage at a much higher rate.
Today’s homeowners are discouraged from selling their home and buying another because so many Americans either bought when mortgage rates were at their record low or refinanced during that time. Roughly 85% of mortgage holders have an interest rate far below 6%, disincentivizing them from giving up their comparatively low rate.
“Even though the length of time Americans are staying in their homes has ticked down from the peak it reached in 2020, it’s likely to head back up again in the next few years,” said Redfin Senior Economist Sheharyar Bokhari. “Today’s mortgage rates are more than double the lows reached during the pandemic homebuying frenzy, which means people have extra incentive to hang onto their homes. Even if rates dip down to 4% or 5%, that’s still significantly higher than the sub-3% rates many homeowners have now. That lock-in effect, combined with older Americans’ desire to stay put in their homes, points to lengthening tenure in the future.”
“But although that limits the number of homes hitting the market, competing forces could help the supply shortage,” Bokhari continued. “Remote work is still much more popular than before the pandemic, so more people have the freedom to relocate or move further away from city centers. Plus, millennials–the largest generation in the U.S.–are in prime moving years, pushed to sell their homes by things like growing families and new jobs.”
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