“People are definitely staying in their homes longer,” said Dr. Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors®, during a recent presentation for PAR.
“Some people are remodeling because they are using their homes for different reasons than when they originally purchased. Perhaps you once had a house full of kids and now you’re re-purposing because they’re all off to college.”
Other reasons that people remodel their homes are often to make items more environmentally conscious, like adding energy-efficient appliances, Lautz said. It’s also common for homeowners to repair a broken household item with a top-of-the-line replacement, she added.
“Remodeling spending is going up,” she said. “That being said, because homes are being held on to for long amounts of time, they aren’t being updated. I think we’re seeing that younger first-time buyers are often cash-strapped. They can’t buy a home that has all of the bells and whistles. They will have to comprise, either where it is or what it looks like. They may decide a house isn’t perfect, it doesn’t have the bells and whistles, but they can customize it.”
Lautz also said a lack of affordable inventory, with yearly price growth for the past nearly 90 months, has left the market with about four months of supply; the higher-income home market has about a 10-month supply. Some current homeowners can’t afford to sell or upgrade currently, keeping them in their homes.
“We are short by 5-6 million homes,” she said. “There is a supply and demand misstep. The buyer today is much wealthier. Income is higher today then what we have seen historically.”
While first-time homebuyers today are more likely to have help from their parents, it’s also more likely that they have a higher income than previous generations.
With fewer adults getting married, Lautz pointed out that single adults have different home needs than coupled buyers. Both single males and females are buying, and there has also been a rise in unmarried and unromantic couples purchasing homes, she said. Additionally, fewer people are having children, shifting housing preferences.
“Being close to a dog park is now a preference for unmarried couples,” said Lautz.