Historical data from the National Association of Realtors (NAR) highlights one homeownership data point that has changed dramatically: the median tenure of a family in a home. For over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%.
Why the dramatic increase?
There are many reasons for this change. Certainly, the fall in home prices during the housing crisis left many homeowners in a negative equity situation. Also, uncertainty over the economy made some homeowners more fiscally conservative about making a move.
One other reason for the increase was brought to light by NAR in their 2017 Home Buyer and Seller Generational Trends Report. According to the report,
“Sellers 36 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 are more likely to move more often (compared to 10 years for typical sellers in 2016). 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!
However, with home prices rising dramatically over the last several years, 93.9% of homes with a mortgage are now in a positive equity situation with 78.8% of them having at least 20% equity, according to CoreLogic. And with the economy bouncing back and wages increasing, many homeowners are in a much better financial situation than they were just a few short years ago.
What does this mean for housing?
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.