Housing Market Has Altered the Math of Moving

In this housing market, it makes less and less sense to move. American homeowners sitting on the lowest mortgage rates in modern history will find it far costlier to buy their next home. Renters facing steep inflation may be better off renewing a lease than hunting for a new one. And for most everyone, it’s gotten harder to find the right next home when there are so few vacant ones available.

The simplest and most affordable decision for many Americans will be to stay put — even if their homes become too small, too big, too crowded, too far from work, too isolated from family, or too much to maintain.

The rate at which Americans move, both across town and across the country, has been steadily declining since the 1980s. Now all of the conditions in the housing market are aligned to grind down that mobility rate even more. That’s a problem both for the broader economy — workers may need to move to reach new jobs — and for millions of households who will find it hard to change their homes to match their changing lives.

“All of this is suggesting that America may be stuck in place,” said Lawrence Yun, the chief economist at the National Association of Realtors.

One likely consequence: “Unanimously,” Mr. Yun said, “I think people would say there’s less happiness in the country as people are living in a mis-housed unit.”

Kyren Bogolub’s mis-housed unit is a two-bed, one-bath duplex in Boulder, Colo., that she shares with her partner and a third housemate. They moved in in 2020, attracted to what seemed like a temporary, cheap and dog-friendly home — a good place to finish graduate school on meager stipends.

But a year after graduating, they’re still living like this: Ms. Bogolub and her partner, Colin Sturrock, in a bedroom that holds their twin-size bed and the two desks where they work remotely. They’ve set up the room so that one of them can change clothes even if the other is on Zoom. They’ve taped over the blinking computer lights that can make it hard to sleep at night.

“The plan was graduate, get jobs, move,” said Ms. Bogolub, who is 33. “We’ve done two of those three things.”

The third has proved far harder. Their alternatives are a study in the absurdity of the American housing market today. Boulder rents have risen more than 15 percent in the last year. Boulder County also lost more than a thousand homes to wildfires in December, making competition for housing even stiffer. Ms. Bogolub has looked into buying, too. Then a little two-bed, one-bath house a couple of blocks away sold this month: 864 square feet in need of a remodel for $1.25 million.

By comparison, the bedroom with the two desks doesn’t seem so bad — even for two adults in their 30s with decent jobs.

“That’s what’s sort of mind-boggling,” said Ms. Bogolub, who now works for the Colorado Geological Survey. “If we can’t really get this going, I don’t know who can.”

In the mid-1980s, about one in five people in America moved annually, most of them within the same county. By 2021, that number had fallen to one in 12. And all signs this spring point to even more people stuck as Ms. Bogolub has been: New mortgage applications and home sales have fallen. Money spent remodeling housing has soared. And renters are renewing their leases at record levels.

The housing market has altered the math of moving for nearly everyone. With rents rising at record pace, tenants typically face smaller price hikes sticking with their current landlord than signing a new lease. That’s because landlords want to avoid the costs of finding new tenants and turning over a property.

“You get a discount to stay put,” said Jay Parsons, the chief economist at RealPage, a platform used by property managers to process and track rents. The problem isn’t just that it’s more expensive to move, he said. The buildings with the most vacancies today are also the most expensive ones.

In the calculus for homeowners, mortgage rates fell to a modern low earlier in the pandemic. With widespread refinancing, four in five mortgage-holders today have an interest rate under 5 percent (half have a rate at 4 percent or lower). Now those bargain rates will have the effect of locking many homeowners in place if interest rates remain elevated after a recent rise.

These dynamics are further connected to each other. When people buy a home or find a new rental, they create a chain of vacancies that open up behind them.

“Most people are living off of other people’s decisions to vacate a unit,” said Dowell Myers, a professor of policy, planning and demography at the University of Southern California.

Every newly built home has a similar effect, enabling a series of vacancies, including among rentals. Conversely, every person who doesn’t move helps clogs the local market for others.

Economists have primarily worried about the long-term decline in long-distance moves, given that migration from one part of the country to another has tended to be a source of upward mobility.

But today the most prosperous parts of the country also have the most expensive housing. That deters people from moving where they might find better jobs, ultimately constraining America’s economic growth, economists say.

Since the housing bust of the mid-2000s, however, nearly all of the nationwide decline in mobility has come from a drop in local moves, and in local moves by renters, Mr. Myers and colleagues find.

Over this time, the supply of new housing built in America has increasingly fallen behind demand. Millennials, now the largest living adult generation, came of age over the same period trying to form their own households and later buy their own homes. The combination of that demographic pressure and the mounting housing shortage helped set up the affordability crisis today.

In 2019, on the eve of the pandemic, there were 19.4 million more renters in America than in 2006. And so we’d expect there to be many more renter movers by then, too. But by 2019, there were actually 3.6 million fewer renters who had moved in the previous year than in 2006.

“That’s a precipitous decline,” said Riordan Frost, who studies mobility at the Harvard Joint Center for Housing Studies. “It’s really only going to get lower as people are unable to afford the asking rent” on a new unit.

All of this matters, he said, not just because people need to move for better jobs, or better-fitting homes. America remains deeply segregated by race and income, and research shows that the neighborhoods where children grow up influence their fortunes in life. If people don’t move as often, Mr. Frost said, families in segregated or less prosperous places have fewer chances to break out of those patterns.

“If people are failing to move to adapt to changing family circumstances, that has colossal social costs,” said Michael Andersen, a researcher at the Sightline Institute, which advocates greater housing construction. That means young families who can’t move near relatives for help, or aging Americans isolated from social networks.

In coming years, many households may simply not move out of a kind of paralysis of indecision.

Joe Swiderski and his wife have lived in the same Washington row home since 2013. They would like more space for their two daughters, now 7 and 2. But they refinanced during the pandemic into a 20-year loan that shaved three years off their mortgage and cut their interest rate to 2.5 percent. That has made what should be a fairly simple decision — a growing family needs a bigger house — much more complicated, Mr. Swiderski said.

“What are you going to weigh more?” he said. A bigger yard, or a higher interest rate? The lack of storage, or the soaring price of housing? “What’s finally going to be the tipping point?” he said. “We don’t necessarily know.”

Ms. Bogolub, in Boulder, will most likely stay put for now, too, if her landlord again offers to renew their lease without raising the rent. In the time she and Mr. Sturrock have lived in this home, however, their lives have changed in at least one way that could ease their housing search: A couple of months ago, their dog died.

“When that happened,” Ms. Bogolub said, “I was kind of like, ‘Well, I guess on one hand this probably improves our options for rental units.’”