By Mike Bodeen · 2 March 2020
For the past decade, mortgage interest rates have averaged under 5% for the year. The two lowest years on record, according to Freddie Mac stats, are 2012 (3.66%) and 2016 (3.65%). Oh, hey, those were presidential election years. And in this 2020 presidential year, it has started out averaging below that, at 3.55%. Hmm. But politics is not the issue here today.
As time has marched on this past decade, with mortgage rates decreasing, and the inventory of available homes dropping to a record low at present, we in the industry have wondered why the supply of available homes hasn’t begun to rise as it usually has done. It’s not like sales substantially increased – though they’ve been increasing of late, even with much lower inventory.
But the main question to answer has been, why aren’t more listings coming onto market?
Perhaps now the answer seems clearer – Tenure length! Sellers just don’t want to move!
Prior to the Great Recession, according to First American Title, the average length of time people lived in their home was less than 6 years. In December 2019, tenure length had more than doubled to 12 years, and is very likely to continue upward.
“…Equity is building, wealth is increasing, their mortgage balance is dropping, while home stability is happening.”
In a study by Buildfax, 2019 marked the lowest rate of mobility in the U.S. since the metric was first tracked in 1947. And in August of 2018, AARP revealed that almost 90% of homeowners approaching retirement wanted to stay in their homes as they age.
So, the double-edged sword, or as the professionals call it, the “duality of low mortgage rates” encourages folks to buy homes and encourages homeowners to keep their homes. And why not? Equity is building, wealth is increasing, their mortgage balance is dropping, while home stability is happening.
What all this means for us on the street, now more than ever, is that home ownership matters!