Homeowners are staying put longer than ever before

Homeowners are staying put longer than ever before

With a disincentive to move, they may just look for other ways to tap that equity

October 26, 2018
 
Jessica Guerin
Homeowners are staying in place longer than ever before, despite the growing amount of equity in their homes.
A new report from First American – a provider of title insurance, settlement services and risk solutions for real estate transactions – reveals that the median tenure for homeownership has jumped to 10 years, up 10% from last year.
By comparison, the median tenure in the pre-crash days of 2007 was four years, and in the aftermath of the market’s meltdown – when many homeowners couldn’t move because they were underwater on their properties – the median tenure was seven years.
Why are homeowners choosing to stay put longer than ever before?
In its Potential New Home Sales Report for September 2018, First American points to an underperforming housing market
“Rising interest rates create a financial disincentive that prevents existing homeowners with low mortgage rates from selling their homes, further limiting supply and restricting existing-home sales from reaching their potential.”
Fleming said homeowners who secured mortgage rates below current rates are likely reluctant to give them up, creating a phenomenon he called the “rate lock-in effect.”
“There is less incentive to sell your home if borrowing the same amount from the bank at today’s rates will be more expensive than your existing monthly mortgage payment,” said Fleming. “As rates rise, many existing homeowners are increasingly financially imprisoned in their own home by their historically low mortgage rate.”
But, home prices have recovered over the last decade, Fleming points out, meaning that many homeowners have accumulated enough equity to sell their homes at a profit.
The result may be that more homeowners look to access the equity in their homes in other ways.
Fleming predicts an uptick in home equity lines of credit as more homeowners decide to fluff their nests rather than move.
“I think that HELOC loan demand will increase,” Fleming said. “The higher mortgage rates go, the larger the financial penalty for moving, and the greater the incentive to renovate with a HELOC loan instead.”

Source: https://www.housingwire.com/articles/47173-homeowners-are-staying-put-longer-than-ever-before

Popular posts from this blog

Millennials Prefer Single-Family Homes Too

Millennials Prefer Single-Family Homes Too DAILY REAL ESTATE NEWS | MONDAY, JULY 06, 2015 A growing body of research is discrediting what was previously assumed about millennials' taste for real estate. Many housing analysts said this generation of young adults preferred small, urban walkable corridors, but recent studies are revealing a different preference.  Millennials, just like previous generations, are showing a strong preference for single-family homes, according to a new Housing Insights report released by Fannie Mae's Economic & Strategic Research Group.  Researchers examined the rates at which young households are occupying single-family homes today and also compared it to young adults' preferences prior to the housing crash.  "The analysis reveals that the likelihood of a millennial household occupying a single-family home today is down somewhat from that of young adults at the peak of the housing boom, but is no different than it was for...
Read more

Loan Demand Takes Sudden Leap From Home Buyers

Image
Loan Demand Takes Sudden Leap From Home Buyers July 11, 2018 © REALTOR® Magazine The number of homes for sale is growing in some markets and that may be the main factor behind the latest rise in mortgage applications, economists say. Mortgage applications for both home purchases and refinancings increased 2.5 percent last week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. The rise was fueled entirely by an uptick in home purchase applications. Mortgage applications for home purchases surged 7 percent in the week and are now 8 percent higher than a year ago, the MBA reports. Abounding housing shortages have mostly kept a lid on any notable increases in home sales this summer, but that gradually may be changing. “Even though inventories continue to decline, they are doing so at a slower pace,” says Danielle Hale, chief economist at realtor.com®. “In other words, while buyers continue to see fewer homes available for ...
Read more

10 Fastest Appreciating Housing Markets in the U.S.

10 Fastest Appreciating Housing Markets in the U.S. Residential home prices are set to appreciate at 4.4 percent nationally, over the next 12 months, according to  Veros Real Estate Solutions'  (Veros) VeroFORECAST that was released on Tuesday. However, housing markets out West are likely to see a much faster appreciation that the rest of the country, the forecast predicted. The latest quarterly forecast covers the 12 months from June 1, 2018, to June 1, 2019, and integrates data from 1,005 counties, 354 metropolitan statistical areas (MSAs), and 13,877 ZIP codes covering 82 percent of the U.S. population. The forecast for Q2 2018 projected that the 10 highest-appreciating markets were concentrated in five states in the West. The forecast also found ten markets that were projected to see a slight depreciation in home values over the next 12 months. All these markets were in the East and South, Veros said. “Washington State and Nevada occupy six of the ten highest-appre...
Read more