What Percentage of First-Time Buyers Will Never Leave? Higher Than You Think

In 2017, we estimate that there were approximately 6.4 million home closings, inclusive of existing home transactions and new construction. We further estimate that 79% of these homes were purchased by owner-occupants, as opposed to investment purchases of vacation, fix-and-flip or rental homes. As such, almost 5.1 million of homeowners purchased their home in 2017, equal to about 6% of all homeowners. This ratio equals the average over the last 20 years, which ranged from 4% in 2011 to 8% in 1999.

Using the historical data, it implies that the average homeowner moves every 15 years. Conversely, over time we have routinely heard and read that the typical homeowner moves every 5-7 years, even though we have never found an accurate source of the math. With first-time homebuyers dominating the headlines again, it led us to wonder, how long will these buyers live in these homes? The answer will surely surprise you.

We utilize data from the Census Bureau’s American Housing Survey, which dives deeply into housing-related metrics every other year. The latest survey was conducted in 2015 and released last year. According to the survey, 44% of homeowners still live in the first home they purchased. We believe this figure is far higher than what a sample of housing professional estimates would produce.

We can also separate the data by the year the home was purchased, and we find a similar conclusion over time. For instance, 63% of owners that purchased before 1980 are still living in their first home. That ratio was the highest for the eight time spans analyzed, but each of the eight were 38% or above. We believe this indicates that turnover is not evenly spread across geographies, age cohorts or income brackets. 

To corroborate this data outside of the Census Bureau, we note that a broad consumer survey conducted by Zillow Group in 2017 reported that “Almost half of homeowners (46%) live in the first home they purchased. Over three-quarters of Millennial owners (77%) live in the first home they purchased, while 52% of Generation X, 39% of Baby Boomer and a quarter (25%) of Silent Generation homeowners are still in the first home they purchased.”

Looking at the macro housing impact of this analysis, if the perception of how soon a home buyer will become a home seller is disconnected from reality, then are Realtors and homebuilders providing the correct guidance at the time of the transaction? Are too many people involved in the home search, including the buyer, incorrectly assuming a trade-up is 5-7 years around the corner? Would the buyer make different decisions if he or she knew there was a 40-50% chance they’d be there for 10, 15 or 20 years? Lastly, given that buyers in recent years have secured near-record low mortgage rates, it’s possible this dynamic becomes even more likely moving forward. Consider that.