Americans holding on to homes for TWICE as long as in 2005 are worsening the housing shortage, report finds – but there's hope as Wall Street's 'oracle' predicts prices will eventually fall as the population of seniors shrinks

Americans are staying in their homes before they sell for twice as long as they did in 2005 – and baby boomers are to blame.

According to a new report from Redfin, the average homeowner today spends 11.5 years in their home, compared to 6.5 years 20 years ago.

Researchers say the trend is driven by older homeowners who aren't “financially incentivized” to move. A shortage of homes on the market is driving up prices.

It comes after former Oppenheimer analyst Meredith Whitney told DailyMail.com that home prices will finally start to fall as more seniors downsize, freeing up homes.

Homeowner tenure peaked at 13.4 years in 2020, according to Redfin's analysis of U.S. Census Bureau data.

The analysis also showed that millennials are more likely to stay at home for a shorter period of time, partly because they change jobs more often than older generations.

Two in five baby boomers (born between 1946 and 1964) have lived in their home for twenty years or more.

By comparison, fewer than 7 percent of millennials – born between 1981 and 1996 – have lived in their home for ten years or more.

The report notes: “Most – 54 percent – ​​of baby boomers who own homes own them for free and with no outstanding mortgage.

“For that group, the average monthly cost of owning a home – including insurance and property taxes, among other things – is just over $600.

“Almost all boomers who do have a mortgage have a much lower interest rate than if they were to sell and buy a new home with the current interest rate of 7 percent.”

But researchers noted that older homeowners who are “hanging on to their homes” are “posing a barrier to young first-time buyers trying to enter the market.”

The findings echo comments made by Whitney, an analyst who was dubbed the “Oracle of Wall Street” after she accurately predicted the 2008 financial crisis.

Her research shows that approximately 90 percent of the housing stock is owned by people over 40, while 74 percent is owned by people over 50.

However, she claims a significant upheaval is afoot as more of these older owners begin to sell, freeing up inventory and driving down prices.

Whitney told DailyMail.com: 'It makes sense that many of these owners will be downsizing over the next decade. That's almost 35 million homes; it's a huge number that has to go through the system.

“My advice to homeowners is, if you want to sell, it's better to do it sooner rather than later.”

During the pandemic, the median U.S. home price rose from $303,465 in March 2020 to $402,045 in December 2023, according to Redfin data.

Many families were caught up in a so-called 'race for space' as they looked for larger homes and gardens in which to spend the lockdown. A widespread shift to working from home has also separated workers from their city center properties.

But home prices have remained high since then, despite mortgage rates soaring in response to Federal Reserve interest rates hitting a 22-year high.

The average interest rate on a 30-year mortgage currently hovers at 6.77 – about double what they were two years ago, according to figures from government-backed lender Freddie Mac.

In a normal market, this would be sufficient to dampen demand for housing and thus keep prices down. However, several experts have noted that a widespread housing shortage in the US has kept home values ​​artificially high.

Whitney emphasizes that there will not be a 'crash' in house prices, but rather an overdue correction.

And some markets will do much better than others.

She said: “Every sixty years, from an economic perspective, we see a similar kind of seismic shift in the American economy.

“Today we see companies shifting to tax-friendly states across the Sunbelt and in Texas, Tennessee and North Carolina. These are the housing markets where growth will continue.

Whitney emphasizes that there will not be a 'crash' in house prices, but rather an overdue correction.

She notes that homeowners have built $21 trillion in equity in their homes over the past decade. So a price drop is unlikely to seriously harm them.

And some markets will do much better than others.

She said: “Every sixty years, from an economic perspective, we see a similar kind of seismic shift in the American economy.

“Today we see companies shifting to tax-friendly states across the Sunbelt and in Texas, Tennessee and North Carolina. These are the housing markets where growth will continue.