Renters are staying put. What does it mean for housing affordability?
Renters are staying put longer than they were a decade ago amid the ongoing housing affordability crisis.
In fact, 1 in 6 people, or 16.6%, are staying in their home for at least a decade. That's up from the 13.9% of people reported a decade ago, according to data from real estate brokerage Redfin.
It's no secret that renters are still being priced out of the market given the high home prices and borrowing rates. In fact, it's gotten to a point where an onslaught of home sellers recently slashed their prices for the first time in over a year to try and lure back buyers, a separate report from Redfin showed.
The medium U.S. home-sale price has more than doubled since 2012. It has also surged more than 40% since 2019, Redfin data showed.
WHY CAN'T YOU FIND A HOME FOR SALE?
Meanwhile, the key U.S. mortgage rate rose to just over 7% as of May 30, which is up 0.24% from a year earlier, mortgage buyer Freddie Mac reported.
Rental prices have also risen, increasing more than 20% since 2019, making it even harder for renters to jump spots.
Realtor.com chief economist Danielle Hale said rents soared in 2021 and 2022, "notching double-digit annual increases for a solid year" Hale said, citing Realtor.com rent data.
Hale said the company observed just under 21% of renters moving in 2022 compared to the more than 27% who did so in 2013.
A huge reason behind so many people staying put is that renters who renew tend to see smaller monthly rent increases than those who move, Hale said, citing research from Avail by Realtor.com.
MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU
While this decline can mean tenants are simply happy where they are, it can also reflect a lack of opportunity, Hale said.
"Some of the increase in renter tenure likely reflects the difficulty that some households are facing in the for-sale market," Hale said, adding that "another piece of the puzzle is that this data likely reflects the aging of the population."
For instance, Hale explained that older households don't move as frequently, so as the population continues to age, there will be longer tenures in the data for both homeowners and renters.
On one hand, Redfin Senior Economist Sheharyar Bokhari said that staying put will allow people to save some money which could eventually go toward a down payment.
"Staying in the same home means they’re likely to face smaller rent increases, and they’re saving money on moving costs and application fees," Bokhari said.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
While Hale agrees, she also argued that this could be a bad thing depending on what's causing longer tenures.
"If a household stays put in a home or neighborhood that is not a good fit because they can't find other options that meet their needs or budgets, this can be an indication of a problem in the real estate market that likely stems from the shortage of homebuilding that has been most acute for owned-homes, but has been observed in rentals as well," she continued.