From A Wealth of Common Sense:
The people buying homes today have excellent credit scores. This wasn’t the case in the subprime boom of the early-to-mid aughts when the majority of buyers came from people with low credit scores.
Just imagine you’ve owned your home for 5 years or more. By now you’ve certainly refinanced at least 2-3 times and likely have a borrowing rate of 3% or less. You’re also sitting on some nice equity through a combination of principal payments and rising prices.
It sure doesn’t seem like housing prices are going to stop rising any time soon and rents are also on the rise so it makes sense people are choosing to hold onto their original property even after buying something new.
They can simply charge enough rent to cover the mortgage, insurance and taxes and still come out ahead by slowly paying down a cheap mortgage and seeing their house go up in value.
If I had to guess it’s going to be years until we see anything approaching a “normal” housing market. We simply didn’t build enough homes following the last housing crash to meet the demand coming from millennials reaching their household formation years.