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New data confirms a trend we have been tracking closely at Bankrate: U.S. homeowners are staying put. The so-called lock-in effect is part of a shift in how Americans view their primary residence.

I’d be the first to admit that I’m part of the problem. My wife and I have been in our house for nearly three decades and have no plans to move. (author) Whereas my wife and I have been in our home for almost two years and lived in our previous one for approximately 3 years and I’d say we are going to be in our current home for at least the next 7-8 years as the crystal ball hypothesizes.

While this facet of low mortgage rates is a primary driver, this isn’t just about borrowing costs. It is about a fundamental change in the math of moving. An unintended consequence is continuity of the K-shaped economy, defined in part by those who own homes on one end and by those who are only dreaming of ownership on the other.

The Resilience Reality Check:
·      The Equity Engine: Many homeowners are staying because they have built massive wealth in their current homes. Such equity is a powerful shield, but it can be “trapped” by high moving costs and elevated mortgage rates, making trading up less attractive for some.
·      The Inventory Crunch: This dynamic perpetuates the cycle of locking housing inventory. Most prospective buyers see a down payment and closing costs as a significant obstacle. For them, the “supply-demand” imbalance isn’t just a bug; it is a feature of the current marketplace.
·      Geopolitical Pressure: Depending on their duration, recent spikes in crude oil and the resulting “war tax” at the gas pump will further strain the liquidity of many households, making the cost of a major life transition, like a home purchase or sale, daunting.

Forward-Looking Advice for Current Homeowners:
If you find yourself “anchored” in a home you intended to leave, consider shifting your approach to optimize it, rather than focusing on liquidity.
1.    Reinvest in the Home, Your Key Asset: With inventory low and replacement costs rising due to higher manufacturing prices for steel and aluminum, improving your current footprint can provide a better return on investment than buying a new home.
2.    Protect Your Liquidity: Rising energy costs are a direct drain on your monthly cash flow. Prioritize paying down high-interest debt and building an emergency cushion to stay resilient while your wealth remains tied up in home equity.
3.    Monitor the “Inheritance Economy”: We are seeing a record share of transactions driven by inheritance. If you are part of the “Great Wealth Transfer,” consult with a professional on how to maximize tax exemptions and step-up in basis benefits before making a move.

The Bottom Line: The “American Dream” of moving every few years for a better zip code is being replaced by a strategy of asset preservation. In this environment, your home can serve as a kind of financial fortress.

This piece was written by Mark Hamrick • Influencer • LinkedIn Top Voice. Economic analyst, survey maven, etc. You can find this article and others from Mark, by visiting him, here <—-