This browser does not support the Video element.
Real estate outlook: Buying a home in 2024
Is 2024 a good time to buy a house? New York City real estate expert and agent Frances Katzen explains.
A new report shows that older Americans are aging and staying in their house, making it difficult for homebuyers to find and afford houses.
According to the analysis conducted by real estate brokerage Redfin, a U.S. homeowner spends an average of nearly 12 years in their home – up from 6.5 years two decades ago.
Using historical county records, Redfin found that nearly 40% of baby boomers have lived in their home for at least 20 years, and another 16% have lived in their home for 10-19 years.
In contrast, less than 7% of millennials have lived in their home for 10 years or longer, partly because they are younger and switch jobs more than older generations.
Boomers hanging onto their homes
The findings also reveal that older Americans are hanging onto their homes because they’re financially incentivized to do so.
Green grass lawns seen in front of homes in a Los Angeles, Caifornia neighborhood on July 5, 2022. (Credit: FREDERIC J. BROWN/AFP via Getty Images)
More than half of baby boomers (54%) who own homes own them free and clear, with no outstanding mortgage, according to the data. This means that their median monthly cost of owning a home – which includes insurance and property taxes, among other things is just over $600.
In addition, nearly all boomers who do have a mortgage have a much lower interest rate than they would if they sold and bought a new home with today’s interest rates. As of Monday, the current 30-year fixed mortgage rate stood at 6.77%, according to data by Freddie Mac.
If that isn’t enough, some state tax systems have policies that make it financially beneficial for people to stay in their homes as they get older. Texas homeowners over 65 can defer property taxes until the home is sold, and in California, Proposition 13 limits property tax increases.
This browser does not support the Video element.
Federal Reserve holds interest rates steady
Potomac Core Association Consulting Founder Daniel Varroney joins LiveNOW's Andrew Craft to break down Wednesday's news from the Federal Reserve that interest rates held steady.
The data found that California homeowners typically stay put longest, partly because of a state property-tax incentive. The typical Los Angeles homeowner has lived in their home for 18.7 years, followed by 17.8 years in San Jose, CA.
Lack of inventory results
Since people stay in their homes longer, Redfin said this has contributed to a lack of inventory, which has ultimately pushed prices higher.
"Long homeowner tenure, particularly among baby boomers, is an obstacle for young first-time buyers trying to break into the market," Redfin wrote in its report.
This browser does not support the Video element.
Forecasting 2024 U.S. housing market
Real estate expert Uri Man joins LiveNOW's Carel Lajara to discuss home affordability levels across the U.S. in 2024.
In 2023, existing home sales (4.09 million) dropped to the lowest level since 1995, while the median price reached a record high of $389,800.
At the end of December, total housing inventory was down 11.5% from November but up 4.2% from one year prior.
Future of homeowner tenure
According to the analysis, homeowner tenure peaked at 13.4 years in 2020, just when the COVID-19 pandemic set off a moving frenzy, and has declined since then.
RELATED: 2023 home sales fell to lowest level in nearly 30 years, new report reveals
Moving forward, Redfin said homeowner tenure is likely to stay flat or increase slightly for the foreseeable future.
They said while sales should pick up a bit this year, it’ll be "more of a trickle than a flood."
This story was reported from Los Angeles.