The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of their data points, which has changed dramatically, is the median tenure of a family in a home, meaning how long a family stays in a home prior to moving.
As the graph below shows, over the last twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2014, that average is almost ten years – an increase of almost 50%.
+Why the dramatic increase?
The reasons for this change are plentiful. The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move. With home prices rising dramatically over the last several years, 95.3% of homes with a mortgage are now in a positive equity situation, according to CoreLogic. With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago.
One other reason for the increase was brought to light by NAR in their 2018 Home Buyer and Seller Generational Trends Report. According to the report,
“Sellers 37 years and younger stayed in their home for six years…”
These homeowners, who are either looking for more space to accommodate their growing families or for better school districts to do the same, are likely to move more often (compared to typical sellers who stayed in their homes for 10 years). The homeownership rate among young families, however, has still not caught up to previous generations, resulting in the jump we have seen in median tenure!
What does this mean for housing?
Many believe that a large portion of homeowners are not in a house that is best for their current family circumstance; they could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple living in a one-bedroom condo planning to start a family. These homeowners are ready to make a move, and since a lack of housing inventory is still a major challenge in the current housing market, this could be great news. In today’s competitive atmosphere, you need a professional on your side who not only knows the exact conditions in your market but can also help you take the steps you need to in order to secure your new home! Now, more than ever, who you work with matters! Our primary goal is to deliver the highest level of service available to each and every one of our clients. We strive to make each of our listings the best they can be. We are always willing to go the extra mile for our clients. Call the Stovall Team today reached at 714.343.9294 Visit stovallteam.com
House-Buying Power At Near-Historic Levels
We keep hearing that home affordability is approaching crisis levels. In today’s competitive atmosphere, you need a professional on your side who not only knows the exact conditions in your market but can also help you take the steps you need to in order to secure your new home! Now, more than ever, who you work with matters! Our primary goal is to deliver the highest level of service available to each and every one of our clients. We strive to make each of our listings the best they can be. We are always willing to go the extra mile for our clients. Call the Stovall Team today reached at 714.343.9294 Visit stovallteam.com
While this may be true in a few metros across the country, housing affordability is not a challenge in the clear majority of the country. In their most recent Real House Price Index, First American reported that consumer “house-buying power” is at “near-historic levels.”
Their index is based on three components:
The report explains:
Combining these three crucial pieces of the home purchasing process, First American created an index delineating the actual home-buying power that consumers have had dating back to 1991.
Here is a graph comparing First American’s consumer house-buying power (blue area) to the actual median home price that year from the National Association of Realtors (yellow line).
Consumer house-buyer power has been greater than the actual price of a home since 1991. And, the spread is larger over the last decade.
Bottom Line
Even though home prices are increasing rapidly and are now close to the values last seen a decade ago, the actual affordability of a home is much better now. As Chief Economist Mark Fleming explains in the report: “Though unadjusted house prices have risen to record highs, consumer house-buying power stands at near-historic levels, as well, signaling that real house prices are not even close to their historical peak.”