Housing slump rekindles old notion of putting down roots
Americans are moving less than at any time since 1948. Many are just waiting to relocate, but some may be embracing a new era of nesting.
(Page 2 of 2)
But, he adds, the housing downturn could be especially transformative for younger, first-time buyers. “When I moved to Washington six years ago, young people were talking about trading in their condo [that they had just bought] for a bigger condo.… That’s not typically what has happened in this country. The middle part of this decade was atypical.”Skip to next paragraph
Subscribe Today to the Monitor
A few years ago, when real estate was red hot, prices were soaring, and a record number of Americans were buying, there was a sense that a house was more of an asset – to be flipped for the next bigger one – than a place to raise a family or grow old.
To be sure, the new affection Americans are showing their homes largely stems from necessity, not choice. According to the real estate website Zillow, 20 percent of Americans owe more on their homes than they are valued in the current market. The site’s analysis shows that nationwide housing prices have dropped 21.8 percent since their peak in 2006, which adds up to a $3.8 billion loss in the overall value of the market.
That has put a crimp in anyone’s plans to relocate. That’s certainly the case for Brooks. A few years ago, he and his wife were able to sell their previous home for a profit of $185,000 after living in it just 18 months. Now, he’s unsure how long it would take to sell his current house, for which they paid $888,000 in 2005, or how much they would make off the sale.
Other factors contributing to the decline in mobility are that fact that unemployment is at a 25-year high, access to mortgages remains out of reach for many Americans in the tight credit market, and employers are reluctant to relocate workers.
Moreover, the current recession is having a broader impact than previous ones.
“Unlike earlier recessions that affected migration primarily in formerly fast-growing areas (e.g., Houston and the 'oil patch' in the late 1980s), this one is not isolated to specific regions and slumping industries,” says a recent Brookings report on demographic trends. “The recession's roots in the dismal housing market and subsequent credit crunch have hindered willing migrants from selling their houses and dissuaded them from buying new homes in previously hot destinations.”
The impact of reduced mobility
According to the Census data, movers in the past year were often unemployed and living below the poverty line. Homeowners represented just 5.4 percent of movers.
That could have a longer-term economic impact, suggests Richard Florida, the author of “Who’s Your City?” and a consultant who coaches city officials around the country on the fine art of attracting affluent newcomers. In his blog earlier this year, he said that the downturn in the housing market and rising unemployment are causing a collision of two long-held American ideals, “the dream of unlimited economic opportunity and to own a single family home.”
“The big cost of the housing crisis may not be what’s happening in the financial markets, it may be the long-run competitive damage caused by sagging labor mobility and the inability to flexibly match the location of workers to the location of jobs,” he wrote.
As for Brooks, instead of trading in pricey Marin County for cheaper Seattle, Portland, or Nashville, he and his wife are refinancing their home and sticking it out. Considering the cost of movers, the possible loss on his home sale, the ordeal of pulling kids out of school and moving away from family members, moving now would put them back to “ground zero,” he says.
That is, unless “an amazing opportunity for one of us” comes up.