May 17, 2017 (STLRealEstate.News) Staying Put – The ebb and flow of real estate norms and what’s expected in a given time-frame is constantly changing. Sometimes, homeowners are eager to sell their home and upgrade in a house far away. Other times, the urge to move isn’t so high. It’s dependent upon real estate trends and financial circumstances at the time of the evaluation. Today, rising interest rates are encouraging homeowners to renovate their homes instead of moving to a bigger place.
Homeowners are moving less, creating a drag on the economy, fewer commissions for real estate brokers and a brutally competitive market for the first-time home shoppers who are not able to land a house of their dreams in a price range they can actually afford today. For most today, reported the New York Times, the desire to stay put began out of caution or necessity. After the Great Recession, millions of homeowners lost out on their businesses and were forced to go into damage control. Thinking about upgrading houses and moving was definitely not at the top of the list.
Even though the economy today has improved with unemployment below 5 percent and home prices are steadily climbing, homeowners with historically low mortgage rates do not want to take on the new interest rates that will come with new home mortgages. Most Americans refinanced when mortgage rates were incomparably low. Grabbing one today just wouldn’t compare.
Data shows that the median length of time people have owned their homes rose to 8.7 years in 2016, which is more than double what it had been 10-years prior. Now that interest rates are being risen by the Fed, the housing market may face a problem called the lock-in effect: homeowners are reluctant to move, since moving entails taking out a mortgage at a much higher rate than what they have today.