Despite a slowing in price-appreciation velocity, the home-sales market is seeing some unprecedented highs, according to a recent report from Irvine, California–based ATTOM Data Solutions.
As SoCal Real Estate recently reported, the report says that median home-price appreciation decelerated in the second quarter to the slowest pace in two years, but it was still up on an annual basis for the 25th consecutive quarter. In addition, it says that homeowners who sold in Q2 2018 had owned an average of 8.09 years, the highest average homeownership tenure since ATTOM began tracking in Q1 2000.
SoCal Real Estate spoke with Daren Blomquist, SVP for ATTOM Data Solutions, about the what’s causing high homeownership tenure, why it matters to the home-sales market, and what he foresees for the future regarding this metric.
SoCal Real Estate Why was homeownership tenure so high in Q2?
Blomquist: The high homeownership tenure is partly due to continued ripple effects from the last recession and partly due to low supply of new homes being built. Some homeowners still have not regained enough equity from the downturn to sell, although that number is steadily shrinking, and some who have regained enough equity to sell are still feeling the psychological effects of the downturn and behaving more conservatively when it comes to homeownership. Even for homeowners who have overcome both of those ripple effects from the last downturn, however, may not be pulling the trigger simply because they would have a tough time finding a place to buy given the low inventory of new homes and other potential move-up inventory for them to purchase.
Has this number been climbing steadily since ATTOM began tracking it?
No. From Q1 2000 to Q4 2008, it consistently registered between four and five years, averaging about 4.21 years. But, then it began to steadily increase in Q1 2009 to the eight-year mark we’re seeing now. With the increase in Q2 2018, we have now seen 38 consecutive quarters with a year-over-year increase in the average homeownership tenure, going back to Q1 2009.
What could make the number begin to fall?
We’ll start to see this number fall if the homebuyers who purchased in the last decade behave differently than the homebuyers who purchased in the previous decade, falling back into the more historically normal pattern of moving up into a new or at least bigger or better home after owning for four to five years. Many of those homeowners are in a very favorable equity position, which should help facilitate that type of pattern, but we’ll also need to see the housing-inventory situation loosen up to help facilitate that pattern.
What else should our readers know about homeownership tenure and the economic factors affecting it?
Homeownership tenure is a key piece to understanding and explaining the type of housing market we’re in. The lengthening homeownership tenure is both a consequence of the tight inventory, rapidly rising home prices market we’re in, but it’s also contributing in part to that environment.