2015: The Breakout Year for Sellers?
Lawrence Yun, PhD., Chief Economist and Senior Vice Preside | January 29, 2015
Home owners are living in their homes longer. Typically, home owners stay in their homes six or seven years before making a move. But in 2014, that number grew to a 10-year average, according to research by the National Association of REALTORS®.
Read more: Shrinking Inventory May Raise Prices Again
NAR researchers are predicting that “pent-up sellers” will likely be unleashed in 2015, after regaining equity and feeling more confident from the economic recovery.
Many home owners have been staying put longer due to the after-effects of the housing crisis, which placed a large number of home owners in underwater status, owing more on their mortgage than their home is currently worth, researchers note. Many home owners may have been waiting to move until home values edged higher.
But for many home owners, that has finally happened: Home values are up 25 percent over the past three years, on average, according to NAR. (Read: The ‘Equity Rich’ Home Owner Is Back)
The “lock-in” effect with interest rates has also been keeping some home owners in place too. Mortgage rates have been near historical lows, and for home owners who snagged a low rate their monthly payments may have been reduced drastically. They may be unwilling to part with the low rate.
That said, mortgage rates continue to remain low in recent weeks, which could finally help motivate home owners to part with their former low rates. The 30-year fixed-rate mortgage remains below a 4 percent average (averaging 3.36 percent last week), and the 15-year fixed-rate mortgage below 3 percent (averaging 2.93 percent last week), according to Freddie Mac.
Source: National Association of Realtors Economic Outlook Blog