Americans used to move every 7 years in the late 20th Century. This decade, the average is close to every 9 years and those two years are clogging up the housing market. Theories, over the past decade were:
(1) the house/mortgage was "upside-down", locking owners into their homes and then, after 2015
(2) nobody wanted to lose the low mortgage rate they have.
The "low rate theory" is now debunked. Mortgage rates are the lowest as they have been since 2011 and people still aren't moving like they used to:
The rate lockdown thesis is easy to test. If it holds up, then when mortgage rates fall, homeowners who have been anxiously waiting will put their homes on the market, and inventory will open up.
Except that has never happened in this cycle. Inventory always went down when rates lowered because demand got better. The only time inventory went up was when mortgage rates went higher, demand got softer and sales went down.
Makes sense, right?
We saw this in 2013-2014 and again in 2018-2019. In each of these periods, when rates went higher, demand fell and inventory went up. However, when it went lower, demand got better and the monthly supply fell. We never saw the releasing of inventory that some had hoped for when rates went lower.
So what's the problem? Baby boomers aren't doing what THEIR parents did:
Baby Boomers, the 75 million Americans born between 1946 and 1964, are clogging up the housing market, according to a Chicago Tribune story last week.
Instead of moving to retirement communities like many of their parents did when they got older, Baby Boomers are opting to age in place. The “near-gridlock” is keeping about 1.6 million houses off the national market, the Tribune story said, citing a Freddie Mac analysis.
This, combined with the lackluster new home construction this decade, is gumming up the works and that's one reason why we see higher housing prices. It's even worse in San Diego. San Diego County is so far behind in new home construction that we may have as much as a 100,000 home backlog.
What's this mean for you?
If you are looking to move up to a bigger home, it may be 15 years of price increases before prices plateau. With interest rates at this 8 year low, now might be the time to develop a strategy to move up BEFORE prices keep going up. The first step is to call one of us and determine just how much of a home you can afford.
