Housing demand continues to outstrip supply, with shortages now at their worst in 20 years. Why?
The answer is simple: Homeowners are happy where they are, according to a new survey by realtor.com®. Sixty-three percent of homeowners surveyed say their current house meets their needs, with baby boomer homeowners especially unwilling to move—a problem for succeeding generations, who are missing out on the 33 million condos and single-family houses boomers currently own. An overwhelming 85 percent of boomers surveyed have no plans to list their home for sale in the next year, with 72 percent reporting that their existing house suits their needs. Sixty-five percent of Gen X homeowners and 52 percent of millennial homeowners echoed the same sentiment.
Homeowners overall also see no need to uproot, the survey shows. Sixteen percent are not moving up due to their low mortgage interest rate (and 13 percent due to their low property taxes), 15 percent are remaining in place because they recently bought their home (a reason reported by 27 percent of millennial homeowners), and another 13 percent are staying put to make upgrades.
“Life events drive real estate transactions,” says Danielle Hale, chief economist for realtor.com. “When the majority of homeowners feel their family needs are being met by their current home, there is nothing compelling them to put their home on the market.”
Many are hesitant to sell, as well, because they know how high-priced and scarce homes are.
“Boomers indeed hold the key to those homes the market desperately needs, both in the urban condo and the detached suburban home segment,” Hale says. “But with a strong economy and rising home prices, there’s really no reason for established homeowners to sell in the short term. Although downsizing might be on the minds of boomers, they face the same inventory shortages and price increases plaguing millennials.”
Fifty-nine percent of millennial homeowners surveyed have no plans to list their home for sale in the next year, but 35 percent do—and, of those, 60 percent are looking to trade up. If their plans pan out, the housing market could gain a boost in entry-level stock.
“The housing shortage forced many first-time homebuyers to consider smaller homes and condos as a way to literally get their foot in the door,” says Hale. “Our survey data reveals that we may see more of these homes hitting the market in the next year, but whether these owners actually list will depend on whether they can find another home.”
More than 60 percent of the real estate brokers in RISMedia’s 2017 Power Broker Survey reported limited inventory as their most challenging issue.