Housing News

Buying a Home? Why It Pays to Think 20 Years Ahead

Homebuyers often focus on what they need in a home today. But what if they’re still living there in 10 or even 20 years?

That possibility is worth considering as Americans hold on to their homes longer, making each purchase a potentially decades-long commitment. Choosing the right home means thinking about how your life and finances might change over time.

Today’s homebuyers expect to stay in their homes for a median of 20 years before selling, according to data cited by New American Funding’s Principal Business Analyst Ryan Schoen in his latest Weekly Insights report. 

Meanwhile, the typical seller has owned their property for a record 12 years. Just over a quarter of homeowners never intend to move again.

For prospective homebuyers, those figures raise an important question: Will the home that meets your needs today still work years down the road?

Why homebuyers are staying put longer

Longer ownership periods can mean fewer existing homes coming onto the market. That makes it harder for prospective buyers to find properties that meet their needs.

“The lack of housing has pushed the typical seller to stay in their home a record 12 years,” wrote Schoen.

That makes it especially important for buyers to consider whether a property can accommodate their future needs.

A home that seems ideal for a couple today, for example, might feel cramped if they have children or begin working from home. Others may eventually want space for aging parents or relatives.

Buyers should think about how their lives might change before deciding which features are essential and where they can compromise.

That doesn’t necessarily mean buying a larger or more expensive home. It may mean choosing a property with a layout that can accommodate different uses over time, while staying within a realistic homebuying budget.

Look for a home that can change with you

A flexible floor plan could become increasingly valuable for buyers planning to stay put for decades.

An extra bedroom might eventually become a home office. A finished basement or separate living area could provide space for relatives.

Ryan’s report highlights the importance of adaptable living arrangements.

“Multi-generational demand (14%) and roommate purchases (a record 4% to 5%) create openings for larger homes, accessory-dwelling unit conversations, and flexible floor plans,” wrote Schoen.

Homebuyers may also want to consider how easily they could navigate the property as they age. A first-floor bedroom, accessible bathroom, or fewer stairs could make a home more comfortable in later years.

The neighborhood matters, too. Proximity to family, medical care, transportation, and other amenities may become more important over time.

Plan for the true cost of owning a home

A home that works for the long haul also needs to remain financially manageable.

Property taxes, homeowners insurance, utilities, and maintenance can add substantially to monthly expenses. And while principal and interest payments on a fixed-rate mortgage generally remain the same, other ownership costs can increase.

Buyers should look beyond the purchase price and calculate the hidden costs of owning a property.

The condition of the home is another important consideration.

A property with an aging roof, outdated heating system, or older plumbing may require significant investments over the years. A thorough home inspection can help identify potential problems before a purchase.

Buyers should also consider how much money they can set aside for unexpected repairs, particularly if they plan to remain in the property for many years. Having savings left after closing can provide a financial cushion.

Those purchasing a condominium or a home in a homeowners association should examine monthly fees and the possibility of future assessments.

Think about how home equity could help down the road

Long-term homeownership can also create financial opportunities.

As homeowners pay down their mortgages, they build home equity, which may increase further if property values appreciate.

That equity can become a resource if they eventually decide to relocate, purchase a different property, or make improvements to their existing home.

Schoen’s report illustrates how years of ownership are influencing today’s housing market.

“Twelve years of ownership and rising prices have built equity that lets many move intentionally, i.e. closer to family, into newer or larger homes, or to assisted living residences,” he wrote.

For current homebuyers, that underscores the potential financial benefits of staying in one place long enough to build equity.

Home values aren’t guaranteed to rise, and the amount of equity homeowners accumulate depends on their mortgage balances and market conditions.

Still, choosing a property that meets a household’s needs for many years may help reduce the likelihood of having to move sooner than planned.