According to the HousingWire, the start of 2025 reveals a housing market still grappling with the “lock-in effect,” driven by rising home prices and mortgage rates. Despite an uptick in inventory, a substantial portion of homeowners seem content to remain in their current homes indefinitely.

A recent survey underscores this trend, showing that 34% of U.S. homeowners have no plans to sell their homes. Additionally, 27% anticipate staying put for at least a decade, and 24% aim to sell within five to ten years. Only a small fraction—8%—plan to sell in three to five years, and an even smaller group, 7%, expect to sell within the next three years.

Baby Boomers and Gen X Lead the Way

Older generations dominate the category of homeowners unwilling to sell. Baby boomers (ages 60 to 79) represent the largest share at 43%, followed by Generation X at 34%. In contrast, millennials and Generation Z combined account for only 28% of those planning to hold onto their homes indefinitely.

This reluctance stems from several factors, including financial stability, market conditions, and lifestyle preferences. Many long-time homeowners have nearly paid off their mortgages, making their current homes an affordable option. Others simply enjoy their homes and see no compelling reason to move. High prices in the current market and the appeal of low-interest rates also contribute to their decision to stay put.

The Impact on Home Sales

The hesitancy to sell has contributed to a historic slowdown in home sales. During the first eight months of 2024, only 2.5% of existing homes changed hands—the lowest turnover rate in decades. For comparison, 4% of homes were sold during the pandemic-fueled boom in 2021, marking a 37.5% decline.

While the market has seen a modest 12% increase in active listings during the latter part of December, inventory levels remain far below pre-pandemic norms. High mortgage rates, which still hover above 7%, and rising home prices, up 5.4% year-over-year in November, further dampen transaction activity.

Motivations for Moving

Homeowners who are choosing to sell are often driven by necessity rather than desire. Major life events such as job relocations, family changes, or significant personal milestones are the primary catalysts for entering the market. On the other hand, the typical “just-because” movers—those looking for a larger or more luxurious home—are opting to stay put due to the financial challenges of buying in today’s market.

Looking Ahead

The trajectory of the housing market in 2025 will depend on various factors, including evolving economic policies and potential shifts in interest rates. For now, prospective buyers will need patience as they navigate a market defined by limited inventory and high competition. Despite these challenges, the gradual rise in active listings offers a glimmer of hope for those seeking their next home.

source: housingwire.com