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

Many Owners Lack Sufficient Insurance to Cover Disasters

Many Owners Lack Sufficient Insurance to Cover Disasters July 20, 2018 Many homeowners have limits on their home insurance policies that are too low to cover the full cost of repairing or rebuilding in case of a natural disaster—and the problem is particularly alarming in areas at risk of hurricanes and flooding,  The Wall Street Journal  reports. Catastrophic damage left in the wake of Hurricanes Harvey, Irma, and Maria last year revealed a widespread lack of full insurance coverage for many homeowners in Texas, Florida, Puerto Rico, and elsewhere, according to the  Journal . The problem is that while many homeowners may have home insurance, their policies are too low or they don’t have flood coverage, which generally must be purchased under a separate policy. “Many people thought that they had a fully insured home or fully insured business” before last year’s storms, says Iraelia Pernas, executive director of Acodese, an industry group for insurers ...
Read more

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

Lenders Feel More Upbeat About Housing

70% of lenders surveyed are expecting home prices to rise over the next 12 months. If you've been thinking about buying it's a great time to start the conversation. Contact me today at 571-970-7195 or whitney@whitneyminnich.com to start the process. Lenders Feel More Upbeat About Housing DAILY REAL ESTATE NEWS | THURSDAY, JUNE 18, 2015 Mortgage lenders are growing increasingly optimistic that demand for mortgages for home purchases will remain strong over the next three months. Fannie Mae's second quarter 2015 Mortgage Lender Sentiment Survey showed more lenders are reporting credit loosening and there's a strong demand from borrowers for home purchase loans. The survey showed that senior mortgage executives are increasingly optimistic, and significantly more optimistic than consumers about future home prices. The share of lenders expecting home prices to rise over the next 12 months reached a survey high of 70 percent in the second quarter. The latest resul...
Read more