Homeownership is often seen as an integral part of the American dream. With home prices on the rise in recent years, many wonder if buying a home is still a sound investment. An important consideration for potential homeowners is how long they plan to stay in a home after buying it.
How Long Do Homeowners Stay in Their Homes on Average?
According to the latest data from the U.S. Census Bureau, the median length of time homeowners stay in their homes is 13 years. This has been relatively consistent over the past few decades. However, the length of time spent in a home can vary greatly depending on factors like location, age of homeowner, and housing market conditions.
Which States Have the Longest Homeowner Tenure?
Some states see significantly longer homeowner tenure than the national median. The states with the longest average homeowner tenure are:
- West Virginia – 22 years
- Vermont – 19 years
- Arkansas – 18 years
- Delaware – 17 years
- Alabama – 17 years
Many of these states have relatively affordable housing markets compared to national averages. Their populations also tend to be older. These factors likely contribute to longer tenures.
Do Bigger or More Expensive Homes Lead to Longer Tenure?
There are conflicting views on whether factors like home size and value impact tenure length. Some argue that buying bigger and more expensive homes leads homeowners to stay longer to maximize their investment. However, data suggests there is little correlation between these factors.
A recent National Association of Realtors (NAR) report found virtually no difference in expected tenure between those purchasing larger homes compared to smaller homes. NAR’s chief economist, Lawrence Yun, suggests lifestyle factors like marriage and kids have more impact on tenure than home specs.
How Do Life Events Impact Homeowner Tenure?
While local housing market conditions play a role, life events are a major determinant of how long homeowners stay in their homes. Major events like having children, retiring, or needing to relocate for a job tend to precede homeowners moving.
Some key life events and their associated impacts on tenure include:
- Marriage – Newly married couples often buy a home together, resetting the tenure clock.
- Having children – Families may move to accommodate more space.
- Retirement – Retirees may downsize or move to new areas.
- New employment – Relocating for a new job is a common reason for moving.
- Death of spouse – The loss of a partner can lead to moving.
These life events routinely emerge as top reasons for homeowners moving out of existing homes. They tend to have much greater influence than home features and appreciation value.
Do First-Time Home Buyers Stay Longer?
Conventional wisdom suggests first-time home buyers may stay in homes longer than repeat buyers. However, the data does not conclusively back up this assumption.
First-time buyers do often intend to stay in a home long-term when purchasing it. But life events still lead many to move sooner than planned. According to NAR, repeat buyers and first-time buyers have nearly identical expected tenures of 13 years.
How Has Tenure Changed Over Time?
Despite relatively consistent median tenure, there are indications it may be gradually increasing. Census data shows average tenure has risen by about one year over the past decade:
| Years | Median Homeowner Tenure |
|---|---|
| 2010 | 12 years |
| 2020 | 13 years |
This gradual increase may be attributed to factors like:
- An aging population staying in homes longer
- Rising home values giving incentive to stay put
- Low housing inventory limiting move-up options
If these trends continue, tenure lengths may continue to rise slightly over the next decade.
How Does Tenure Vary by Location?
Tenure duration tends to vary greatly depending on location. Factors like home price appreciation, local economies, and demographic trends contribute to regional differences. Some cities see much higher rates of mobility while others have long tenure lengths.
Here are the metro areas with the longest and shortest median homeowner tenure according to a Redfin analysis:
| Longest Tenure Metros | Shortest Tenure Metros |
|---|---|
| Miami – 15 years | San Francisco – 4 years |
| New York – 14 years | Seattle – 5 years |
| Los Angeles – 12 years | Washington, D.C. – 6 years |
Economically vibrant cities with booming tech and energy sectors tend to see higher turnover. Cities like San Francisco and Seattle have experienced rapid home price growth alongside an influx of younger professionals, leading to shorter tenures.
How Does Tenure Length Impact Net Wealth?
Gaining home equity and appreciation over time is a primary way homeownership contributes to net wealth. The longer a homeowner stays in a home, the more wealth they can accumulate, up to a point.
According to research by Freddie Mac, median net wealth increases rapidly in the first 8 years of homeownership before slowing down and plateauing around year 16. After 16 years, additional tenure provides limited net wealth gains.
This indicates there are diminishing returns on tenure length. The biggest net wealth gains come in the first decade or two of ownership. After that point, homeowners staying longer does not necessarily translate to significant added wealth.
Conclusion
The median homeowner tenure hovers around 13 years, but can stretch much longer or shorter depending on individual circumstances. While home size and value do not seem to impact tenure, life events play a major role in determining when homeowners move. Local housing market conditions also influence if homeowners are inclined or able to sell. With an aging population and limited housing inventory, median tenure lengths may continue to slowly rise in coming years. But turnover will remain high in economically vibrant areas attracting younger residents.
In terms of wealth building, the first 10-15 years of homeownership provide the largest gains. After that point, additional years provide diminishing returns. Ultimately, how long it makes sense to stay depends on individual needs and goals.
References:
National Association of Realtors. (2021). Home Buyer and Seller Generational Trends Report.
Redfin. (2019). Redfin Study Finds Homeowners Staying Put Longer, On Average. [Press release].
Freddie Mac. (2021). Homeownership and Wealth Creation.