17 May WHEN PURCHASING A HOME, HOW LONG DO YOU PLAN TO STAY?
The national average number of years someone should stay in their home to make financial sense over renting is 1 year and 11 months as of the end of 2016. This is 1 month longer than in 2015 and continues to lengthen. In California, this number is even higher.
According to Zillow, before owning a home pays off, homeowners will need to own a home for:
- 4.1 years in San Diego, up from 3.4 in 2015;
- 2.1 years in Riverside, up from 1.8 in 2015;
- 2.2 years in Bakersfield, up from 1.7 in 2015;
- 2.4 years in Sacramento, up from 2.1 in 2015;
- 2.5 years in Fresno, the same as 2015;
- 4.1 years in Los Angeles, the same as 2015;
- 4.5 years in San Francisco, up from 2.9 in 2015; and
- 5.1 years in San Jose, up from 3.2 in 2015.
Since homeowners are needing to live in their houses longer, this is slowing down turnover, and won’t pick up again until the next homebuyer demand from Generation Y and Baby Boomers starts up.
Generation Y’s delay in being able to purchase a home was due to their entry into the workforce during the recent recession, which has had the longest recovery since the Great Depression.
Impacted by the recession as well, Boomers had to delay retirement to make up for their loss of assets (including real estate). Once they’re able to retire, they will be replacing their larger homes with ones of more manageable size.
This combined activity of home buying and selling by the Boomers and Generation Y is expected to strengthen California sales volume and home sales to a peak by 2020-2021.