Thirteen Years

The median duration of homeownership in the U.S.A has increased from 7 years to a little over 13 years, although homeowners in some cities have moved more recently and/or more frequently than groups in the rest of the country. How does this impact the way a Buyer should think about purchasing a home?

1. Focus on thinking more long term - closer to thirteen years - than the more recent obsession with what a home will be worth in one, three or even 7 years from now.
2. Valuations will always dip and rise, but looking at the recovery rates of dips, you can see that most home prices recover from dips within 3-5 years. They certainly do rather well over a 13 year period.
3. Shelter is an essential need. You have to live somewhere. If you are not paying a mortgage, real estate taxes and maintenance costs, you WILL be paying rent. Three years of renting is manageable: 13 years of renting is very costly and mostly wasteful. In 13 years, you'll have almost paid down half of a 30-year mortgage.
4. Ownership still has notable tax advantages, including the $750k mortgage interest tax deduction and the capital gains exemption.
5. 13 years of life represents around 25% of average adult life: home is a critical component to a well-lived life. Often it is the one stable element in a lifetime. When you buy an expensive vacation, you don't expect to get your money back from that trip in 5 years: the experience has tremendous value. With your home, you may not make a fortune, but at least most homes retain their value and many increase in value close to the rate of inflation. Some do much better.

Focusing on the long term seems always to be wiser: the roller-coaster of quarterly, annual and even 3-year cycles is not very reliable.