The days of homeowners shuffling from one home to the next every few years are coming to a close, according to ERA Real Estate’s latest real estate market report released on Wednesday. By 2037, the median homeownership tenure will nearly double from eight years to 15 years — meaning the youngest millennials, Gen-Zers, and the oldest Generation Alpha members will increasingly need creative agents to find their abodes.
“Homeownership tenure is not a statistic that is typically tracked when evaluating market conditions, making this a unique industry report,” ERA Real Estate President and CEO Sherry Chris said in a statement. “In looking at homeownership tenure trends, it is clear that shifts in how long people stay in their homes impact inventory levels.”
The report revealed homeownership tenure began dramatically increasing after the height of the Great Recession, where more than six million homeowners lost their homes to foreclosure.
“After the Great Recession and the very gradual market appreciation, people’s attitudes shifted, and the narrative around homeownership changed,” the report read. “The home was no longer viewed as a revenue-generating vehicle but now valued as a place to live and celebrate life.”
Since then, homeownership tenures have gradually increased from a median of 4.8 years (2010) to 8.5 years (2019). Now, homeownership tenures are projected to double in the coming years as 44 percent of homeowners reported to NAR in 2020 they plan to stay in their homes for at least 15 years.
“For homeowners who took advantage of the low mortgage rates to refinance existing mortgages or borrow additional money to fund home renovations, their tenure may extend to keep a low monthly payment or because they want to enjoy the upgrades,” the report read. “[However], as people stay in their homes longer, the available inventory decreases due to lower turnover.”
“Combined with homebuilder’s cautious return to new development, a prolonged drag on inventory is taking shape,” it added.
Not only is constricted inventory levels causing headaches for buyers, but it’s also causing issues for the real estate industry as there are way more agents than available inventory to sell. In 2020, NAR experienced its largest single-year jump in membership as 80,000 new agents entered the industry.
ERA Grizzard Real Estate broker-owner Gus Grizzard said the worsening inventory crunch and the overwhelming demand for real estate careers means professionals must get creative with how they work.
“We have seen home tenure increase dramatically — doubling in the last 20 years — yet it has not been widely discussed,” Grizzard told Inman in an emailed statement. “We need to uncover how our industry can adapt, and growth areas brokerages should consider, especially if home tenure continues to rise and impact inventory levels for years.”
Grizzard and 10 fellow broker-owners said real estate agents must do several things to survive a shifting market: work their sphere of influence more aggressively, get creative in creating supply with more seller-focused marketing, reach the renter market with property management, tap into the need for multigenerational housing, and expand their reach into nearby feeder markets.
“Right now, many aspirational buyers can be converted into sellers when they learn about the many options available for selling their home from traditional brokerage to iBuyer to bridge products,” ERA Sunrise Realty broker-owner David Moody said of his expanded seller-focused offerings.
“Our company serves two resort markets, one by a lake and one by a lodge. These two markets comprise 35 percent of company sales volume,” ERA Team VP Real Estate broker-owner Bill Soffel added of the opportunities to get second-home buyers into feeder markets. “We are increasing our marketing to second-home buyers and wealth managers, estate planners and tax attorneys.”
He continued, “There is also the opportunity to target people who are planning to retire in the next five years who may want to purchase a vacation property that ultimately becomes their primary residence upon retirement.”
Beyond masterminding solutions for the current market, the report revealed it’s equally important to anticipate coming market shifts based on data trends and personal feedback from clients about their future wants and needs, so you’re top of mind the next time they want to buy or sell.
“Homeownership is not going away,” the report read. “There may be shifts in population, attitudinal changes in buyers or sellers, a focus on different amenities or a continued expansion of technology utilization, but brokerages and sales professionals remain as the conduit to the consumers’ needs.”
“Knowing when and how to adapt has always been a competitive advantage, one that successful brokers across the country will continue to leverage no matter the market conditions,” it concluded.
Read the full report below.