The average person spends about 10 years (87k hours) in a house before moving, which already goes against people’s tacit models.
It seems to me that this is the key point, which is why you made it the title and the first sentence of the original post, but I feel like it has been lost in the discussion and maybe swamped by the rest of your post. The longer the tenure, the better buying is. 10 years seems pretty short to me, maybe not a mistake for the average buyer, but definitely a mistake for the marginal buyer. I’d expect most buyers to have an explicit model of more than 10 years, not just a tacit model. But translating it into hours seems to lengthen or obfuscate it and distract from the point.
keep in mind that 10 year is the average *financial break even* time which means any not-normally-counted costs (non financial benefits of renting) haven’t been accounted for. In the Bay you’ll break even in ~15 years *assuming current conditions prevail.* Which would put median Bay area houses at over double current prices in real terms. This would put mortgages in a range where only a DINK tech couple could afford the average house.
there may be more recent data available but looking at how the numbers shift over time I don’t expect the difference to be large. Tenure went up a bit 2008-2016 but has begun going back down. It’s hard to find reports of distributional data vs means and medians, generally without even a SD.
Edit: in hot markets tenure tends to be longer, median for SF is about 16 years. So slightly more than half of people reach break even in SF, about the same in the south bay. A coin flip on financial outcomes seems bad once non-monetary costs are taken into account (time + opp.)
It seems to me that this is the key point, which is why you made it the title and the first sentence of the original post, but I feel like it has been lost in the discussion and maybe swamped by the rest of your post. The longer the tenure, the better buying is. 10 years seems pretty short to me, maybe not a mistake for the average buyer, but definitely a mistake for the marginal buyer. I’d expect most buyers to have an explicit model of more than 10 years, not just a tacit model. But translating it into hours seems to lengthen or obfuscate it and distract from the point.
Among first time buyers[1]
33% move out within 6 years
45% move out within 10 years
keep in mind that 10 year is the average *financial break even* time which means any not-normally-counted costs (non financial benefits of renting) haven’t been accounted for. In the Bay you’ll break even in ~15 years *assuming current conditions prevail.* Which would put median Bay area houses at over double current prices in real terms. This would put mortgages in a range where only a DINK tech couple could afford the average house.
1. http://nahbclassic.org/fileUpload_details.aspx?contentTypeID=3&contentID=194717&subContentID=482084
there may be more recent data available but looking at how the numbers shift over time I don’t expect the difference to be large. Tenure went up a bit 2008-2016 but has begun going back down. It’s hard to find reports of distributional data vs means and medians, generally without even a SD.
Edit: in hot markets tenure tends to be longer, median for SF is about 16 years. So slightly more than half of people reach break even in SF, about the same in the south bay. A coin flip on financial outcomes seems bad once non-monetary costs are taken into account (time + opp.)