Slower Home Sales Due in Part to People Staying Longer in Their Residences

Wall Street Journal writer Laura Kusisto reported earlier this month that, “U.S. homeowners are staying in their residences much longer than before, keeping a glut of housing inventory off the market, which helps explain why home sales have been sputtering.

Homeowners nationwide are remaining in their homes typically 13 years, five years longer than they did in 2010, according to a new analysis by real-estate brokerage Redfin. When owners don’t trade up to a larger home for a growing family or downsize when children leave, it plugs up the market for buyers coming behind them.

“‘If people aren’t moving on, there just are fewer and fewer homes available for new home buyers,’ said Daryl Fairweather, Redfin’s chief economist.”

“People Are Staying in Their Homes Longer—a Big Reason for Slower Sales,” by Laura Kusisto. The Wall Street Journal (November 3, 2019).

The Journal article pointed out that, “Economists say aging baby boomers are the biggest culprits because many are staying healthier later in life and choosing not to downsize. Some look around at the lack of smaller, less expensive homes and are loath to get into bidding wars with their children’s generation to get one.

“States, such as California and Texas, have also implemented tax policies that make it easier for older residents to remain in place.”

Ms. Kusisto added that, “The lack of mobility among homeowners isn’t the only reason why supply is tight. Since the recession, home construction hasn’t been keeping up with demand due to shortages of labor and land. The share of U.S. homes that are purchased by investors rose to an all-time high of 11% in 2018, according to CoreLogic. Some of those investors quickly flip those purchases, but others turn them into single-family rentals and hold on to them for years.”

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