Another trend that is the result of the current housing market: fewer people are moving and more homeowners are remodeling what they already have.
Now, according to research, homeowners are eager to hold onto the ultra-low mortgage interest rates they were able to get after the crash, and they are leery about taking a chance on a move. Many also lack the financial wherewithal to upgrade to a larger, pricier home. They own houses that haven’t recovered enough of their value in the wake of the crash to generate the down payment needed to buy a new place.
The percentage of homeowners moving up to their next home is the lowest in 25 years, said Todd Tomalak, vice president of research for John Burns Real Estate Consulting. Instead of moving, people are deciding to make starter homes permanent and are expanding and repairing them for the long term, he said…
From 1987 to 2008, homebuyers stayed in their homes six years on average before selling, according to the National Association of Realtors. The number of years homeowners expected to stay in their homes started increasing during the housing plunge and has been at 15 years since 2010…
Last year, people spent about $320 billion on remodeling — a 5 percent increase over the previous year, Tomalak said. This year, they are expected to spend $350 billion — a 9 percent increase.
Interesting data yet there are some conflicting things going on here. This raises a few questions for me:
- If you aren’t moving soon, remodeling can make sense. At the same time, how does the remodeling square with homeowner’s interests in making money on their home? Many remodels do not recoup the money put into them – unless people are hoping that the tight market will keep housing values going up and up.
- Does the same animosity some have toward big box retailers like Walmart also carry over to Home Depot and similar stores? I know some things can vary tremendously from retailer to retailer – such as wages and benefits – but all big box stores have some similar effects including knocking out local businesses (who goes to the local hardware store for all their remodeling needs?) and contributing to an automobile culture with massive footprints on commercial stretches.
- On one hand, fewer people moving suggests the housing market is sluggish and this may not be good for the housing industry and the economy at large. On the other hand, people staying in the same house longer means they are more rooted in their communities (combats the critique of the soulless suburbs or the image of Americans just wanting to move up) and are avoiding senseless consumerism (just chewing up new house after new house). Is this an example where the consumer driven economy doesn’t really work in the long-run? (Or, maybe enough homeowners can be convinced that they need the newest item for their home – concrete countertops! wi-fi enabled refrigerators! – that the remodeling can pick up some of the slack.)