Cau­tious home­own­ers are re­luc­tant to move on

Honolulu Star-Advertiser - - BUSINESS - By Conor Dougherty

For much of last year, Greg Rubin was look­ing to buy a big­ger house. He has been in the same two-bed­room home for 17 years and hoped to up­grade.

This year Rubin has a new plan. He stopped look­ing and em­barked on a home ren­o­va­tion.

“My girl­friend would like to get a larger house, but right now I’m stay­ing put,” said Rubin, who lives in Es­con­dido, Calif.

Rubin is the face of what ap­pears to be a new nor­mal in the real es­tate busi­ness: Home­own­ers are mov­ing less, cre­at­ing a drag on the econ­omy, fewer com­mis­sions for real es­tate bro­kers and a fiercely com­pet­i­tive mar­ket for first-time home shop­pers.

For many home­own­ers the de­sire to stay put be­gan out of cau­tion or ne­ces­sity. Rubin’s land­scap­ing busi­ness lost more than half its rev­enue in the years af­ter the Great Re­ces­sion. Mil­lions of other home­own­ers lost their jobs or were stuck in homes worth less than they owed the bank — two big rea­sons that the me­dian home­owner ten­ure rose to about 8-1/2 years last year, up from about 3-1/2 in 2008, ac­cord­ing to data from Moody’s An­a­lyt­ics and First Amer­i­can Fi­nan­cial Corp. That is the long­est ten­ure since their data be­gan in 2000.

But even though the econ­omy and the hous­ing mar­ket have im­proved, econ­o­mists ex­pect el­e­vated home­owner ten­ure to con­tinue for the next decade or even longer. That is be­cause the bet­ter econ­omy has come with a steady rise in in­ter­est rates. Like tens of mil­lions of oth­ers, Rubin re­fi­nanced when mort­gage rates were near a his­toric low. He has a 3.25 per­cent in­ter­est rate on his home loan, so even if he could find a sim­i­lar home for the same price, his pay­ment would go up con­sid­er­ably. For a 30-year fixed-rate $500,000 mort­gage, an in­ter­est-rate rise to 5.5 per­cent would in­crease the monthly pay­ment roughly $700 to $3,600, in­clud­ing es­ti­mated taxes and fees, ac­cord­ing to Zil­low, the real es­tate data ser­vice.

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