Homeowners Today Stay in Their Homes Twice As Long As They Did in 2005, Driven Largely By Older Americans Aging in Place

Rhea-AI Summary

Redfin's report highlights a decline in homeowner tenure from its 2020 peak due to the pandemic-induced moving frenzy. The typical U.S. homeowner now spends 11.9 years in their home, up from 6.5 years two decades ago. Baby boomers and Gen Xers have a significant impact on housing market trends, with older Americans driving longer homeowner tenure. Factors like financial incentives, state tax policies, and personal preferences contribute to the trend. The report indicates a decline of 1.5 years from the 2020 peak, with homeowner tenure expected to remain stable or slightly increase in the future.

Insights

Economist

The observed decline in homeowner tenure from its peak in 2020 suggests a shift in housing market dynamics. The pandemic-induced mobility, characterized by remote work and lower mortgage rates, facilitated an increase in home sales. However, the subsequent slight decrease in tenure implies a stabilization of this trend. It is important to analyze the economic implications of such a shift, particularly its influence on housing supply and demand.

Longer homeowner tenure contributes to the scarcity of available housing, which can exacerbate affordability issues, especially for younger generations attempting to enter the market. The aging population's preference to 'age in place' and financial incentives to retain homeownership, such as mortgage-free status or favorable tax policies, have significant implications for the housing supply. These factors, coupled with the high cost of moving and the current mortgage rates, are likely to maintain the pressure on housing inventory and prices.

For the broader economy, the interplay between homeowner tenure and housing market trends can affect consumer spending, as homeownership stability influences household expenditure patterns. Additionally, the housing market's health is often a bellwether for economic activity and the trends highlighted could signal shifts in consumer confidence and mobility.

Market Research Analyst

From a market research perspective, the changes in homeowner tenure offer insights into consumer behavior and demographic shifts. The data indicating that baby boomers and Gen Xers are more likely to own homes and stay in them longer reflects broader societal trends such as the aging population. Furthermore, the generational differences in homeownership tenure underscore the varying needs and financial capabilities across age groups.

Millennials and Gen Z's shorter tenure in homes, driven by lifestyle choices and job mobility, point to a potential market for more flexible housing options. This could lead to an increased demand for rental properties or homes that cater to a more transient lifestyle. Understanding these preferences is crucial for businesses in the real estate sector to adapt their strategies accordingly.

The report's findings also highlight the potential for growth in the assisted living and home healthcare industries, as many older Americans prefer to stay in their homes. Companies that offer products and services facilitating aging in place could see an uptick in demand.

Real Estate Analyst

Analyzing the real estate implications of the reported trends, one can deduce that the homeowner tenure landscape is shaped by an intricate balance of economic, demographic and policy factors. The aging population's impact on the market is profound, creating a bottleneck for younger buyers, which is further compounded by the shortage of inventory.

The report's indication that the homeowner tenure has declined since the pandemic peak, yet is expected to remain relatively stable, suggests that the market is not likely to experience a significant influx of homes for sale in the near future. This stability in tenure may lead to sustained high prices and could potentially limit the mobility of homeowners, especially if they are disincentivized to move due to higher current mortgage rates.

For real estate investors and companies, these trends necessitate a strategic approach that considers the long-term implications of an aging homeowner demographic, the preferences of younger generations and the economic forces at play. Diversification into new construction and renovation of existing homes to suit the needs of an aging population could be potential areas of opportunity.

Redfin reports homeowner tenure has declined from its 2020 peak due to the pandemic moving frenzy

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The typical U.S. homeowner has spent 11.9 years in their home, up from 6.5 years two decades ago. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Homeowner tenure peaked at 13.4 years in 2020, just when the pandemic set off a moving frenzy, and has declined since then.

Baby boomers are aging in place, driving homeowner tenure up

Older Americans staying in their homes is the driving force behind longer homeowner tenure. Nearly 40% of baby boomers have lived in the home they currently own for at least 20 years, and another 16% for 10-19 years. For Gen Xers, more than one-third (35%) have lived in the home they currently own for at least 10 years.

Millennials typically stay in homes for shorter periods, largely because they’re younger and partly because they switch jobs more than older generations. Less than 7% of millennials have lived in the home they currently own for 10 years or longer, 13% for 5-9 years, and 30% for less than five years. Nearly all Gen Zers who own a home have had it for less than five years, which stands to reason because the oldest Gen Zer was 26 in 2023.

Baby boomers and Gen Xers have an outsized impact on overall housing-market trends for a few reasons. One, the American population is aging: Roughly 17% of people in the U.S. were 65 and older as of 2020, up from 13% in 2010. Two, they’re most likely to own homes: Nearly 80% of baby boomers and 72% of Gen Xers own their home, compared to 55% of millennials and 26% of Gen Zers.

There are several reasons why homeowner tenure has increased since the early aughts:

• Older Americans are hanging onto their homes because they’re financially incentivized to do so. Most (54%) baby boomers who own homes own them free and clear, with no outstanding mortgage. For that group, the median monthly cost of owning a home–which includes insurance and property taxes, among other things–is just over $600.
• Nearly all boomers who do have a mortgage have a much lower rate than they would if they sold and bought a new home with today’s 7%-ish rates.
• Some state tax systems have policies that make it financially beneficial for people to stay in their homes as they get older. Texas homeowners over 65 can defer property taxes until the home is sold, and in California, Proposition 13 limits property-tax increases.
• Many older Americans prefer aging in their family home rather than moving to a different house or entering an assisted-living facility: Nearly 9 in 10 Americans between 50 and 80 years old said in a recent survey it’s important to stay in their homes as they get older. And with medical and tech advancements, it’s increasingly possible to do so.
• It was cheap and easy to move in the early 2000s. More people than usual were able to get mortgages and buy homes because mortgage-lending standards were loose, which ultimately led to the subprime mortgage crisis.

People hanging onto their homes is contributing to the inventory shortage

Lack of homes for sale and high housing costs contributes to people staying in their homes longer, and people staying in their homes longer contributes to lack of inventory and pushes prices higher.

Long homeowner tenure, particularly among baby boomers, is an obstacle for young first-time buyers trying to break into the market. A recent Redfin analysis found that empty-nest baby boomers own twice as many three-bedroom-plus homes than millennials with kids. Some young families are turning to new construction, and others are renting homes.

Homeowner tenure has dropped 1.5 years from its 2020 peak and is expected to stay flat

Homeowner tenure has declined slightly each year since 2020 because the pandemic kicked off a moving frenzy, with remote work and record-low mortgage rates leading to more homes changing hands in 2021 than any year since 2006.

Moving forward, Redfin expects homeowner tenure to stay flat or increase slightly for the foreseeable future. Existing-home sales hit a 15-year low last year, with many homeowners locked in by low mortgage rates. While sales should pick up a bit this year, it’ll be more of a trickle than a flood.

To view the full report, including charts and metro-level data, please visit: https://www.redfin.com/news/homeowner-tenure-2023

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214391634/en/

Redfin Journalist Services:

Ally Braun

206-588-6863

press@redfin.com

Source: Redfin

FAQ

How long does the typical U.S. homeowner stay in their home according to Redfin's report?

The typical U.S. homeowner now spends 11.9 years in their home, up from 6.5 years two decades ago.

What factors are driving longer homeowner tenure according to the report?

Older Americans, particularly baby boomers, are staying in their homes due to financial incentives, state tax policies, and personal preferences.

What is the impact of baby boomers and Gen Xers on housing market trends?

Baby boomers and Gen Xers significantly influence housing market trends as they are more likely to own homes and are aging in place, leading to longer homeowner tenure.

How has homeowner tenure changed since its peak in 2020?

Homeowner tenure has dropped 1.5 years from its 2020 peak due to the pandemic-induced moving frenzy, with expectations of remaining stable or slightly increasing in the future.

What are some challenges posed by long homeowner tenure?

Long homeowner tenure, especially among baby boomers, poses challenges for young first-time buyers trying to enter the market, as it contributes to inventory shortages and higher prices.