Older people staying put means housing shortage and rising prices
A recent study by the National Association of Realtors (NAR) has concluded that the housing recession of 2007-10 has drastically lengthened the amount of time that home owners expect to stay in their current home. From 1985 until 2008, the length of time a seller had lived in their house held fairly steady: the median current ownership of homes listed for sale was between six and seven years.
Since the Great Recession of 2008 ended, from 2011-15 that figure has hovered between nine and ten years. New owners, when polled, say that they expect to live in their new home for at least 15 years – and that higher number has remained steady since 2010.
That’s a problem. Because in that same time period new home construction has diminished significantly and a new wave of millennial buyers has begun entering the marketplace. The resulting lack of inventory has put upward pressure on prices for a generation that is carrying the largest student debt load since records have been kept.
On the opposite end of the life cycle, AARP has done research among adults between the ages of 50-64, 71 percent of whom hope to age while living in their current residence. When you ask those 65 and over, that number jumps to 87 percent.
So, just at the time when new home construction is at a low point and the number of first time buyers is increasing, you have a Baby Boom generation who plans on staying in their current home until the end of their lives, and younger sellers who are holding on to their homes longer because of the Great Recession.
If that sounds like a “perfect storm” for home prices to skyrocket, right at the time when new buyers can’t afford it, put on your slicker and batten down the hatches.
It’s going to be a rough ride. If you’re lucky enough to have bought in a popular neighborhood, you will most likely see some substantial appreciation.
You’ll get the buyers who can afford to buy, and they’ll have to pay through the nose to do it. If you’re not in one of the chosen few “hot” locations (remember, it’s always “location, location, location”), you may feel like your drifting out at sea.
- Wayne Curtis has been a licensed real estate agent for 23 years, serving the Baltimore region, currently with REMAX Advantage Realty. Contact him with your real estate questions, firstname.lastname@example.org.