How long do homeowners stay in their homes?
Have you ever thought about how long the average homeowner spends living in their home? The answer to this question might catch you by surprise.
According to a study completed by the National Association of Realtors, homeowners spend an average of thirteen years in their homes.
Since the 1980s and 90s, when homeowners resided in their properties for approximately six years, this number has grown more than twice its original size. Now you may be asking yourself, what's changed?
Let's Take a Look at the History
One of the key contributors to this shift is the baby boomer generation or those born between 1946 and 1964. Now that many of these individuals have reached their golden years, they tend to remain in their homes longer due to strong ties to their families and communities.
In addition, the aftermath of the 2007-2008 financial crisis has also impacted how long owners stay in their homes. During this time, the housing market took a severe hit, which caused a drastic decrease in home prices.
A considerable number of homeowners were left 'underwater' with their mortgages because their balance exceeded their home's value. As a result, some families lost their homes to foreclosure, while others chose to remain while hoping for a recovery in their property value before even thinking about selling.
Current Trends in Homeownership
Over recent years, we've noticed a trend of increasing home prices across the US, impacting how long individuals stay in their homes. With home prices on the rise, homeowners have realized significant appreciation in value.
This buildup of equity is a powerful financial tool that allows homeowners to borrow against it if they find themself in a bind or simply enjoy the satisfaction of knowing their net worth has increased from their investment.
We also have to consider the interest rates, which have increased tremendously over the last couple of years. Homeowners are choosing to live in their homes longer because by selling their present home and buying a new one, they could face a higher mortgage payment. Even if their new home is the same price as their previous home, borrowing money is now more expensive, which increases their mortgage payments.
Trends for New Construction Homeowners
As for new construction homes, the statistics look a little different. While studies have not determined a specific average time frame for individuals staying in newly constructed homes, several factors still influence how long they remain.
Buyers of new homes often seek modern amenities and customized features that surpass them staying in their homes for thirteen years. A lot of this is due to the heavily personalized characteristics that newly constructed properties allow buyers to indulge in. Another thing to consider is that many new construction home buyers seek to elevate their lifestyle. Because of this, they may either continue to upgrade their new home or build another home if they want to climb further up the property ladder.
Many of these same individuals may have previously owned a smaller or older home and are looking to upgrade to something more modern, larger, and located in a desirable location.
Location plays a significant role in how long buyers are staying in their homes. Most modern homes are often built as part of master-planned communities. Many of these communities are created to offer diverse features aimed at enhancing the residents' quality of life. There is access to excellent amenities such as community pools, fitness centers, parks, schools, and convenient shopping plazas.
Since there are higher costs associated with buying a new home in master-planned developments, owners are sometimes more reactive to the ups and downs of the housing market.
As these communities mature and develop into their own unique haven for their residents, some homeowners may decide to stay longer and reap the benefits. Conversely, if they see an opportunity to gain a significant profit, some will cash in on their equity and sell sooner than traditional homeowners to build a larger home.