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Scary number for real estate: Home ownership may run 20 years! Bad news for house hunters, industry pros

Scary number for real estate: Home ownership may run 20 years! Bad news for house hunters, industry pros

The share of U.S. households moving from homes they own averaged 5 percent a year from 2011 to ’14 compared with 9 percent in 1988-91, census data show. SHUTTERSTOCK.COM

Also …

I’ve seen plenty of scary real estate numbers in my day.

Overvaluation trends that turned your stomach. Lending habits that defied logic. Panic buying or selling patterns that lacked sense. Foreclosure data that simply saddened me.

But recently I saw the results of one real estate survey that boggled my mind. Now if this column sounds a little bit like one of those world-is-ending, buy-my-survival-kit-now infomercials, well, so be it.

For almost forever, people owned homes for a relatively short amount of time – typically five to seven years – then sold them for something bigger or better or different, or to deal with a major life change.

So I was stunned at what I saw in the latest annual homebuyers survey from the California Association of Realtors – in particular, the answer to the poll’s question, “How long do you expect to own your home?” The 2014 number was stunning enough: 8.8 years. Then came the 2015 answer.

A mind-blowing 20 years. Yes. Two decades. Wow!

“I remember it was seven years when I started with CAR,” says Leslie Appleton-Young, the association’s chief economist, whose days with the trade group date to 1984.

Think of the cash flow generated by that seemingly guaranteed stream of transactions as the lifeblood of housing business. Think of all the people – salespeople, lenders, transaction facilitators and all their supervisors and intermediaries – who are employed thanks to our nomadic habits.

Perhaps more important, that consistent churn creates buying opportunities for house hunters. Longer ownership would put a crimp on California’s already limited for-sale housing supply.

But in some ways, this sea change in ownership habits has been quietly brewing. It’s actually part of a nationwide trend. The share of U.S. households moving from homes they own averaged 5 percent a year from 2011 to 2014 compared with 9 percent in 1988-91, according to census data.

Staying put is likely a trend rooted in financial and emotional issues.

Proposition 13 keeps property taxes low for the long-term homeowner. And moving itself is costly and stressful. Have folks finally figured out that if relocation isn’t for a far better job or school district, why bother?

The housing industry must come to grips with the fact that real estate transaction costs are simply too high. Is there a paradigm-shifting technology – think Amazon or Uber – that might dramatically change how we buy and sell homes?

Homeowners may also have gleaned a financial lesson or two from the Great Recession. Many folks who owned homes for an extended period were able to ride out the housing storm. Perhaps extended ownership predictions are a reflection of continued real estate angst.

In addition, there’s the odd impact of low mortgage rates – a buyer’s best pal, but one that may not be here to stay. It’s likely that 3 percent or 4 percent mortgage rates – common since the recession – won’t be available in coming years. When today’s buyers go to sell, will future higher rates make that next home too costly, keeping owners financially locked into their current residences?

Or I wonder if homeowners, knowing the challenges that youngsters have in buying a California home, are thinking about keeping the home in the family and passing it along to future generations? Maybe homeowners with this long-term vision will eventually turn their home from primary ownership to an investment property.

“Something really big is going on here,” Appleton-Young says.

It’s possible that 20-year ownership projection is just a statistical blip. I know it’s not a totally odd sentiment, as I’ve owned my home for 21 years.

Yes, you could stretch to find a silver lining here. Long-term ownership could possibly improve California towns’ often-lacking sense of community. So it might not be a total societal negative – unless you work in the real estate industry and get paid per transaction.

Even if the habit of 20 years of ownership never really catches on, the real estate industry should take note. Ownership length is growing, and it will continue to do so.

This isn’t just cyclical bad news, if true. It’s a pattern that will rewrite much of what we know about California homeownership.

Contact the writer: jlansner@ocregister.com

The Orange County Register – News Headlines : Real Estate News