But even though the economy and the housing market have improved — unemployment is below 5 percent, and steadily rising home prices have freed millions of people from the scourge of “underwater” mortgages — 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, Mr. 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.
Rates for 30-year fixed mortgages were at 4.05 percent last week, after being under 3.5 percent as recently as October, according to Freddie Mac, the mortgage finance giant. And with the Federal Reserve signaling further interest rate increases, economists expect mortgage rates to head toward 5 percent by the end of the year. The higher that rates climb, the more tempting it becomes for people to stay in place.
“Once mortgage rates climb to 5 or 5.5 percent, we are going to start to see the lock-in effect really take hold,” said Svenja Gudell, chief economist at Zillow.
Of course, many other factors could influence the housing market. The tax plan outlined by President Trump would remove some of the incentives for homeownership, even as it left the mortgage interest deduction in place. And the lingering weakness in the latest quarterly economic report could prompt the Fed to hold off on raising rates.
In any case, the increase in homeownership tenure is yet another example of how the economy is still feeling the effects of the 2008 financial crisis and the Federal Reserve’s extraordinary policy measures to address it. It also highlights just how far the housing market remains from its pre-recession form.
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Single-family home starts, which were at a 821,000 annual rate in March, are about half what they were before the recession. Existing-home sales are about one-fourth below their pre-recession high. This is despite years of population growth and the movement of millennials, now America’s largest generation, into adulthood and the work force.
“We are coming out of deep, dark hole called the housing bust, but we are a long way from normal, and we may never get back to normal, if normal was the average person stayed in their home for four or five years,” said Mark Zandi, chief economist of Moody’s Analytics. “We’re at eight-plus now, and even under the best of circumstances, maybe we get to six.”
Interest rate “lock-in” is expected to be most pronounced in desirable cities with a high rate of job growth as well as higher-income neighborhoods, according to a 2014 study by the Institute for Housing Studies at DePaul University. That is because credit standards went way up after the recession, so most of the people who refinanced when rates were rock bottom tended to have better credit, bigger paychecks and homes in pricier neighborhoods.
Still, the impact will be felt throughout the economy. Whether in broker commissions, new furniture or junk hauling, moving costs a lot of money, so longer home tenures are likely to weigh on consumer spending.
It could also hurt the economy in more subtle ways, by making people less mobile. For instance, some people might find a better job in another city but decide not to take it because the pay would not make up for the increase in mortgage costs.
“People aren’t moving from weak economies to better economies,” Mr. Zandi said. “They aren’t moving from jobs that aren’t as suited to them to jobs that are. When moving becomes more difficult financially, the economy becomes less fluid.”
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Glenn Kelman, chief executive of Redfin, a national real estate brokerage, sees this in the form of a persistent inventory shortage. More people are buying tear-downs. The bidding wars that have come to characterize hot job markets like San Francisco and Seattle are spreading to less-expensive cities.
Mr. Kelman said those who would normally sell their home to get the down payment for a new one were increasingly becoming landlords because their low-interest loans meant extra profit in rent — translating into less business for him.
“People who buy a home and sell their home are the meat and drink of the real estate business, but increasingly, we’re only getting half the sales from them,” he said.
The inventory of homes for sale has declined about 60 percent from its peak in 2007, according to the National Association of Realtors. With fewer homes on the market, wishful homeowners like Eric and Amanda Olson are likely to rent longer, buy later in life and settle for a fixer-upper.
The Olsons live in Chicago in a two-bedroom apartment with views of Wrigley Field. For the last few years, when winter turned to spring, they embarked on a weekend-to-weekend journey in search of their first home.
When they started, it was just the two of them, and they limited their search to two nearby neighborhoods. But with inventory scarce, competition high and a newborn who arrived in January, they now go to open houses with their son in a baby carrier and have expanded their search to encompass most of the city’s North Side and a few nearby suburbs.
“There is no inventory — we’re talking four or five houses in our price range a week,” said Mr. Olson, who works in information technology at a bank. “Some of those are houses with holes in the floor, holes in the roof — and even those are flying off the market.”
