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.
Jeff Brooks and Daisy Whitney have been on the hunt for a lifestyle change. They yearn for a different part of the country, a place less expensive than the Bay Area where their careers wouldn’t be all-consuming. Even though the couple is successful – he runs a multimedia production company and she’s a well-known technology reporter – they afford living here by working 15-hour days and spending too much time with their laptops and not enough with their two children.
“But in the end, like everything else in life, it came down to money,” says Mr. Brooks. And with the average price of houses down 25.8 percent over the past year in Marin County, where they live, it seemed unlikely they would make enough money from selling their home to justify an expensive out-of-state move. “By the time it was said and done, there wasn’t that much of a savings.”
For now at least, they are staying put – like a lot of other Americans. The rate of Americans changing addresses is at the lowest level since 1948, when the Census Bureau began tracking nationwide mobility trends. The number of people who moved in 2008 fell to 11.9 percent compared with 13.2 percent the year before. In total, 35.2 million people changed residences last year, the smallest number since 1962.
Of those who did move in 2008, the vast majority didn’t go far. Sixty-five percent stayed within the same county, according to Census data released late last month.
Americans will probably begin moving again once real estate prices stabilize and unemployment rates decline, but meanwhile, the housing crisis has ushered in a new era of nesting. Homeowners are opting out of the market – some waiting on the sidelines for improvement – and new home buyers are entering it with intentions of putting down roots.
“There is definitely a shift in how buyers are viewing buying a house. There is a lot more pressure on buyers, and they seem to understand that they are making a long-term commitment,” said San Francisco realtor Eva Stoyanov, in an e-mail response to questions. “It's kind of like getting married as opposed to dating.”
From asset to home
For society at large, the decline in nationwide relocation is just a “short bump” on the road of long-term, sustained mobility, says William Frey, a demographer and senior fellow at the Brookings Institution in Washington.
After all, he says, the US is the most mobile country in the industrialized world.
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.”
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.