Like a priest at the pulpit, Boston condo sellers are saying with clarity and conviction they’re not going to drop asking prices by 20, 15 or even 10% now or in the near future. How long can this last, who knows. But one thing is certain, the religious fervor displayed by todays Boston condo sellers won’t be ending anytime soon. They have built up equity and there in no rush to sell.
Of late, Americans have been substantially less likely to move than they had in years past. As The Hill noted in 2021:
“New data from the U.S. Census Bureau shows just 8.4 percent of Americans live in a different house than they lived in a year ago. That is the lowest rate of movement that the bureau has recorded at any time since 1948.
“That share means that about 27.1 million people moved homes in the last year, also the lowest ever recorded.”
Even before the pandemic, record lows were being set. The reasons for this are many, including an aging population, fewer children, and, of course, housing being so expensive.
In that same vein, the number of new home listings was also falling even before prices went through the roof and the recent interest rate hikes.
The average duration of homeownership went up to eight years, an increase of “about three years over the last decade,” according to The Zebra. The change in the median length of stay is even more dramatic. It has almost tripled from about five years in 1985 to 13.2 years in 2021.
If you think about it, it makes sense. Why move, particularly now?
Most homeowners (approximately 95%) have 30-year, fixed-rate mortgages. Anyone who took out a loan in the last five years has a rate below at least 4%. Why would you ever voluntarily pay off such a loan?
And as we have seen, fewer and fewer people are.
Interestingly enough, the same thing is happening in the rental market.
Tenants are renewing their leases at a record level. In April of 2022, over 65% of tenants renewed their lease versus just over 56% in 2019, according to RealPage.
This also makes sense if you understand that the giant rent increases you hear about are just for new listings. For example, back in April, when the year-over-year rent increase for new listings was 16.9%, NPR found that the average tenant was only paying 4.8% more than the year before.
The reason is that very few landlords are willing to raise rent all the way to market on current tenants. Increasing the rent much more than 5% often inspires a tenant to leave just out of spite. So, if rent is (or at least was) going up 16.9% elsewhere but only 4.8% where you are, you’re likely to stay put.