Prior to the housing crisis, many consumers were in the mindset of buying a “starter home” to stay in for five or six years and then move on to a larger space as their family grew. But the idea of the starter home has become a fading memory.
Homeowners don’t want to give up their ultralow mortgage interest rates that they have secured in recent years. They’re also finding fewer larger homes to move into. As a result, many are making the best of what they once pictured as their “starter home.”
The percentage of homeowners moving up to their next home is at the lowest average in 25 years, Todd Tomalak, vice president of research for John Burns Real Estate Consulting, told the
Chicago Tribune.
The stay-put mindset is leaving fewer homes available for sale and prompting home prices to surge due to the short supplies, Tomalak says.
“We’ve never seen this in any prior cycle,” he says.
Home buyers stayed in their homes an average of six years before selling from 1987 to 2008, according to the National Association of REALTORS®. Since 2010, the number of years homeowners are staying has now jumped to around 15 years.
“A generation is stuck in starter homes,” Urban Institute researchers wrote in a July report. First-time homebuying has rebounded since the housing crisis, but repeat buying remains sluggish, the report notes.
Meanwhile, the home remodeling business is surging. Last year, homeowners spent about $320 billion on remodeling, a 5 percent increase over the prior year, Tomalak says. Remodeling is expected to top $350 billion this year, a 9 percent increase.
Source: “Why Americans Are Shunning New Homes and Opting to Stay Put, Renovate Instead,” The Chicago Tribune (Aug. 24, 2017)
