Housing-market headwinds are keeping American homeowners in their properties for the longest stretches on record, in a sharp distortion of the mobility Americans have for decades prized.
Across the country, homes that sold in the third quarter of this year had been owned an average of 8.23 years, according to an analysis from Attom Data Solutions. That’s almost double the length of time a home sold in 2000, when Attom’s data begin, had been owned.
It’s partly the long tail of the housing crisis that’s created stagnant conditions and a less dynamic housing market, Attom spokesman Daren Blomquist told MarketWatch.
As of the second quarter, 2.2 million homeowners were still underwater on their mortgages, meaning they owe more to their lending institution than the home is worth, according to data from CoreLogic. Another 550,000 have 5% equity or less, meaning that if that property were to be sold the transaction costs, such as a real-estate agent’s commission, would likely leave the homeowner with nothing. (For an earlier look at the issue, here’s a 2017 story about homeowners with equity levels of 10% or lower.)
The hypercompetitive market that’s emerged from the wreckage of the crisis is also keeping people in place. Many homeowners have ample equity in their homes, but hesitate to list those homes because they’re worried about finding a property to buy if they do sell.
A few others may be trapped by “rate lock”—enjoying the benefits of their ultralow mortgage rates, and unwilling to spend more on financing costs.
Attom’s Blomquist is struck, he said, by how much more static the expensive coastal markets have become, while other parts of the country are still enjoying healthy churn.
The top nine metro areas with the longest homeowner tenures are all in Connecticut or Massachusetts, and the next seven are in California. In contrast, the metro areas with the quickest turnover are Oklahoma City, Denver, Colorado Springs and Austin.
Those metro areas aren’t just what Blomquist likes to call “the traditional steady-eddy markets”; they’re also booming because of an influx of newer residents. Still, areas like Memphis and Chattanooga, Tenn., and Minneapolis, which are not far behind, may not seem sexy, but, in Blomquist’s words, “There is more possibility to move up. Appreciation goes up slowly in those areas, and it’s less likely that you’re going to lose ground on the housing market. If you do need a bigger home or a better school district, it’s easier to trade up and move up.”