The Signal - Marty Kovacs - 18 January 2017
Real estate may still be the best long-term investment, but first-time homebuyers are finding it more difficult than ever to grab onto the first rung of the ladder, partly because owners simply are not selling, opting instead to stay put.
Ultimately, that may yield what is known as a “European model” of homeownership, where children inherit a home from their parents and property stays within a single family over multiple generations.
The California market isn’t there just yet, but that could be what the future looks like here unless more homes are built, said Leslie Appleton-Young, keynote speaker at a recent Southland Regional Association of Realtors forum and the chief economist and vice president of the California Association of Realtors.
“Seventy-one percent of Californians over age 55 have not moved since 1999,” Appleton-Young said. This creates a “huge problem for first-time buyers who want to move into one of those properties.”
Indeed, today’s average owner has been in their home for 10 years, which is the longest period ever recorded over nearly four decades, she said. On top of that, more single-family homes now are rentals, which take additional supply off the market.
Baby Boomers are not moving for a multitude of reasons. It’s a trend felt most directly in the high-cost, high-population coastal regions, but actually is part of a national demographic shift, she said. Owners don’t sell because they like their current interest rate, worry their property taxes might jump, have concerns that they might not qualify for a new loan, or find that there simply is nothing they want for sale.
Combined, all these forces have yielded a paltry three-month or less inventory of homes for sale locally. This represents a significant drop from the seven-month supply that used to be the norm.
“Out migration from Greater Los Angeles is on the rise,” Appleton-Young said. “It’s even more pronounced in San Francisco. Forty-seven percent are Millennials. We’re losing people who are our workforce, those with high school and college educations.”
With little new construction underway and fewer chances to buy, former residents of California are gobbling up properties elsewhere.
Seventy percent of home sales in Austin, Texas, 40 percent in Raleigh, N.C., and 30 percent in Portland are completed by folks from, guess where — sunny California.