Homeownership isn’t for life anymore, with Americans now moving much more than they did a few decades ago. As the market changed with the housing crisis, so did the amount people are spending to fix up their homes, as well as the number of people buying second properties for vacation homes or investment.
- Moving the American Heart
- Remodeling Still Big Business
- Doubling the American Dream
- First-Timers vs. Retirees
- Finding a New Home
Moving the American Heart
Home may still be where the heart is, but it’s not necessarily where we stay put.
If you look back at previous generations, people used to stay in one home for a couple of decades. They would work away at their home loans until they truly 100% owned the house and remain in it into old age. Today, that’s the exception to the rule.
As of 2007, a homeowner will sell their house about every six years on average. Americans have become moving experts, packing everything into boxes and heading to new locations 11.7 times throughout their lives. “At age 18, a person can expect to move another 9.1 times in their remaining lifetime,” explained the US Census Bureau, “but by age 45, the expected number of moves is only 2.7.”
Longevity isn’t the only way that the typical homeowner profile is changing. Today, married couples buy houses more often than anyone else (representing three out of every five buyers), but single women have become the second-largest demographic.
Remodeling Still Big Business
Another important way that homeownership has changed is the amount that’s invested into the house once it’s purchased.
Homeowners invested $227 billion on remodeling in 2007. About 25% of that was spent on fixing and maintaining houses, while the other 75% went to refurbishing and upgrading, noted Home Insight. The capital spent specifically on improvements was approximately $2300 per property.
Part of the reason the remodeling figure was so high was that some people were spending far more than that average. Many families were overhauling their bathrooms and kitchens eight years ago, spending tens of thousands of dollars. Those spending over $20,000 on improvements represented 9% of the homeowner population.
Well, that $227 billion was actually the peak, says 2013 data highlighted by Rose Quint of the National Association of Home Builders (NAHB). Now, the improvement and repairs total has dropped to $150 billion. “That was 34% less than in 2007 ($227 billion), 19% less than in 2009 ($186 billion), and 16% less than in 2011 ($178 billion),” said Quint. “In the 10 years included in this analysis, total homeowner remodeling expenditures have only been lower once: in 2003, when they were $128 billion.”
In other words, yes, home improvement has shrunk considerably, but you could say that’s a correction after the excessive zeal of the housing bubble. The other way to look at the remodeling market is that it’s expanded 17% since 2003, growing from $128B to $150B.
Doubling the American Dream
People move around, but they also sometimes double-down. Almost 6% of homeowners had an additional home in 2004, with the two homes typically separated by no more than 150 miles.
Generally speaking, this “second home” segment is of working age. Many use it as an investment property, often renting it out. For others, though, this alternate property is a getaway located in a scenic area.
Like remodeling, this figure has understandably dropped considerably since the housing crisis as well. Here is the amount of Americans with second homes, as surveyed in the Spring of each year since 2008:
- 2008: 12.6 million
- 2009: 12.4 million
- 2010: 12.4 million
- 2011: 12.4 million
- 2012: 11.8 million
- 2013: 11.6 million
- 2014: 11.0 million
- 2015: 10.5 million
In other words, in the last seven years, there has been a gradual 17% decline in the population of Americans who own a second home.
First-Timers vs. Retirees
When people retire, it’s typical to downsize. As people age, they don’t want to have to clean or maintain such a large property. They also want to reduce their expenses.
One thing that has withstood the test of time is that smaller properties have always been attractive both to older generations and to those entering the market for the first time. When realtors show smaller properties near various amenities, attendees of open houses are often a mix of millennials and seniors. “This creates an interesting dynamic as move-down buyers find themselves in competition with first-time buyers for the same housing stock,” said Home Insight. “And when demand exceeds supply, the prices tend to rise.” In other words, the prices on smaller homes can sometimes be inflated because diverse demographics want them.
Since retirees sometimes have difficulty purchasing a smaller house due to the competition, they wisely hesitate to sell their existing homes. That understandably creates a problem, though, because the sale is often necessary to free up cash and credit for the trade-down. One option for empty-nesters who can’t afford paying on both homes is to go ahead and sell, get a storage unit for a few months, and live in a rental or extended-stay hotel for a few months.
Finding a New Home
We move much more often than our parents did. We don’t invest as much in our homes – although it’s still a huge total. The experience of homeownership is always adapting to different cultural and economic factors. The critical role of homeownership as a piece of the American Dream remains the same, though.
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