It may be that the simplest and most affordable decision for many potential movers is to simply stay put.
Does It Even Make Sense to Move?
Current homeowners are living in homes having the lowest mortgage rates in modern history. Those homeowners considering moving are finding it would be much more expensive for them to buy their next home if they could even find a next home to buy. Renters facing steep inflation may find that renewing their lease, even at a higher monthly rate, may be relatively more affordable than moving.
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Regardless if their current homes or apartments are too small, too large, too crowded, too far from work, too isolated from family and friends, too expensive to maintain, it just may be too expensive to move.
Mobility Rate Declining
During the mid 1980’s, approximately one in five people in the US moved annually, even if that move was within the same county. By 2021, one in 12 people moved annually despite the pandemic-inspired “exodus” from large urban centers to smaller, more suburban/rural areas.
Data from the 2022 Spring house market indicates that people are “stuck in place.” New purchase mortgage applications (-16% y/y, according to the Mortgage Bankers Association) and home sales (-5.9% y/y, according to the National Association of REALTORS®) have dropped. Money spent on remodeling/renovating has soared + 19.7%, according to the Leading Indicator of Remodeling Activity (LIRA) at the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
Best Deal = Staying Put
More apartment renters than ever (57%, an increase of +3.5% y/y, according to RealPage) are choosing to renew leases in the same unit despite rents jumping amid rapid inflation. Renters are paying +10.7% more compared to their previous leases. If they moved to another unit, they would be paying +18.7% more compared to previous renters of the same unit.
For buyers and renters alike, the best deal, usually, is to stay put.
This mobility decline is “precipitous,” according to Riordan Frost, a mobility researcher at the Harvard Joint Center for Housing Studies. “It’s really only going to get lower as people are unable to afford the asking (price) on a (different house or apartment unit.)”
Tipping Point Unknown
What are potential movers going to prioritize when thinking about moving or staying? A bigger yard, or a higher interest rate? The lack of storage, or the too-long distance from work or family, or the soaring price of housing? No one knows at this point.
Data suggests that the mobility rate may grind down further even as workers need to move to reach new jobs and even as millions of households find it harder to change their homes to match their changing lives.
“All of this is suggesting that America may be stuck in place,” said Lawrence Yun, chief economist with NAR.
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Thanks to the New York Times.