People staying at home longer is a big reason for slower salesReturn to Blog
According to a new analysis by Redfin, Americans stay in their homes for much longer than before creating a shortage in off-market housing inventory. This helps explain why home sales have been fluctuating throughout the year into 2020. Generally, when owners do not shop for a larger home for a growing family or decline as children depart, it stalls the market for buyers who come after them. Long-term homeowners who have remained contributes to the housing inventory falling to their lowest level in decades, which has also contributed to rising housing prices for median-priced homes.
Fewer homes for sale are a major reason for lower mortgage rates, record levels for equity, and a strong labor market. Economists at Redfin say that baby boomers are the biggest culprits because many stay healthier later in life and choose not to sell. While some look around for smaller and less expensive homes and are unwilling to compete with their children's generation to get one.
In metropolitan areas such as San Francisco, a typical homeowner stays in their home for about 14 years, which has increased in comparison to a decade ago. Inventories during the same period have fallen more than 46%. The number of homes for sale fell in 2018 and at the beginning of 2019, and in recent months it has fallen back near the record lows of 2018.
The slow-paced mobility among mature homeowners is not the only reason why the supply is limited. Since the 2008 recession, residential construction has not met the demand due to labor and land shortages. While a proportion of U.S. homes obtained by investors reached a peak of 11% in 2018, according to CoreLogic. A portion of these investors rapidly make a return selling these homes, yet others convert them into single-family rentals and stick with them for years.
To receive help buying or selling a home in the Bay Area, please schedule a call with Advent Properties’ Executive Vice President and Broker-Associate, Darryl Glass.