Homeownership durations are on the rise. From 2000 to 2009, the average time people held onto their homes was just four to five years, hardly enough to accumulate significant wealth. However, as of 2024, homeowners are staying put for about 12-13 years. This shift is largely due to lifestyle changes such as working from home, which has become a permanent arrangement for many. People are now buying bigger homes with more rooms and investing in real estate to secure passive income and fund their retirements.
Despite these changes, only 37% of Americans have lived in their homes for over a decade. Owning a home for a longer duration is crucial for building real wealth, as selling too soon can result in substantial financial losses due to taxes and fees. After the 2008 financial crisis, lending standards tightened, and many homeowners chose to stay in their current homes longer. This trend has continued as the economy and home equity have slowly recovered.
The pandemic further influenced homeownership trends. Faced with health risks and rising home prices due to low inventory, many homeowners decided it was safer and more practical to stay put. This trend has resulted in homes becoming more valuable, as we now spend significantly more time in them than before the pandemic.
Interestingly, the median homeownership duration in the U.S. now stands at around 12 years, longer than the average, which reflects a significant shift in homeowner behavior. This is partly due to homeowners refinancing to take advantage of lower mortgage rates during the pandemic, a trend that is likely to keep the median homeownership duration high for some time.
In certain areas like California, where property tax increases are capped, there’s an extra incentive to hold onto properties longer. Some homes purchased decades ago in California are now worth a lot more, yet the property tax paid is relatively low compared to what new buyers would pay on less valuable homes.
On a personal note, I considered selling a San Francisco property in 2012 but ended up refinancing and reducing my mortgage payments instead. This decision allowed me to leave my corporate job and spend more time with my family, highlighting the benefits of long-term homeownership and its impact on personal and financial freedom.
Given the current trends, the average homeownership duration is likely to continue increasing, influenced by low mortgage rates and the recognition of the financial benefits of holding onto real estate longer. Homeownership is a powerful investment tool that more Americans are utilizing to build wealth over the long term.
