Residential Magazine

A Sluggish Pace

The mortgage industry should expect fallout with Americans moving at record-low numbers

By Robert Greenberg

Loading up the U-Haul to cross the country or head to a neighboring city in pursuit of one’s dreams of a better life, an education, a new job or a bigger house still happens. It’s just not as common as it once was.

In fact, only 9.8% of the American population ages 1 and older changed addresses last year, according to the U.S. Census Bureau. That is the smallest share on record dating back to 1948 and has potentially wide-ranging implications for loan originators, property investors, home sellers, real estate agents and others connected to the mortgage and housing industries.

For single-family rental (SFR) investors, for example, this trend could mean more stability for their rental properties, which is good news. It also could mean less turnover of inventory, a challenge in today’s market for investors who want to expand their rental-property portfolios.

For mortgage originators, declining mobility could translate into less demand for mortgages and fewer loan originations over each potential borrower’s lifetime. That could occur if new household formations and population growth doesn’t make up the difference.

Declining mobility

From the 1950s through most of the 1960s, roughly 20% of the U.S. population moved to a new home each year, according to census figures. The annual mobility figure dipped below 20% in the late 1960s. Mobility continued to gradually decline before a bump upward in the mid-1980s. Since about 1985, however, the overall trend has been one of declining mobility.

It used to be that a young adult got married, bought his or her starter home and, in a few years, moved up to a bigger home (maybe more than once). Couples moved for new career opportunities (maybe more than once). Having children also was a signal that a larger home, perhaps one in the suburbs near good schools, was in order. After retirement, some people downsized into a smaller home, an apartment or a retirement community, or they moved in with their children and, if necessary, into a nursing home.

It is not so cut and dried anymore. There are a number of things that could be impacting Americans’ lack of movement.

Affordability challenges

Certainly, housing affordability is top of mind when it comes to mobility or lack thereof. With home prices rising faster than incomes in about two-thirds of the nation’s housing markets, according to Attom Data Solutions, renting has become a more affordable option.

Owning a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 53% of the 855 U.S. counties analyzed by Attom Data in its 2020 Rental Affordability Report. Among the 136 counties analyzed in the report with a population of at least 500,000, renting is more affordable than buying a home in 94 counties (69%). In the most populous counties, those with at least 1 million people, renting remains the more affordable option a whopping 84% of the time.

Incentives lacking

The nation’s low mortgage rate environment also could be impeding housing mobility, according to First American Financial Corp. chief economist Mark Fleming, who raised that issue during a recent housing webinar. Homeowners who already have a low mortgage rate between roughly 3.5% and 4% won’t be incentivized to sell and move unless the rate drops even lower to, say, 3%, Fleming said.

The only thing that makes housing more affordable if income doesn’t increase and prices don’t decrease is mortgage rates. Lower rates equate to increased purchase power.

Flat rates, however, don’t provide the needed incentive for people to list their home and move. “Flat rates are almost as bad on the supply side as rising rates because there’s no benefit — there’s no penalty — but there’s no benefit … to move,” Fleming said.

Technology impacts

Technological advancements could be impacting mobility. Employers are seeing the benefit of saving on brick-and-mortar office space through remote worksites. The expansion of broadband data networks throughout the country offers employees — even those in rural or midsized cities — the opportunity to work from home without sacrificing access to high-speed internet and secure connections. 

With technology, some professionals can change jobs without having to move, even if their new job is in a different city or a different state. Improvements to other types of technology, such as videoconferencing via Wi-Fi on a laptop, has reduced the need for all parties to be on site for important meetings and has facilitated the ability of global companies to connect more seamlessly.

Generational factors

Two large generations, the millennials and the baby boomers, are the main forces in the nation’s mobility trends. The U.S. population is aging and baby boomers, who are about 55 to 74 years old, are waiting longer to retire. 

Boomers also are aging in place, with some skipping the step of downsizing altogether. Others who are downsizing are waiting until later in life to make the move to a smaller space. All of this affects housing inventory, which has been constrained for a number of years. Fifty-two percent of boomers say they’ll never move from their current home, according to a 2019 Chase Bank survey of 753 boomer homeowners. 

Millennials also are a key driver of the trend toward migration stagnation, according to the Brookings Institution. Young people typically are the most mobile, but the millennial generation was hit hard by the housing crisis and the Great Recession, both of which affected their mobility. Brookings noted that millennials have had to deal with “stuck-in-place” issues, such as high housing costs and underemployment, which have postponed key life events such as marriage and homeownership.

There are indications that millennials are looking beyond popular gateway cities such as New York, Los Angeles and San Francisco to midsized cities in the Southeast or the Midwest where they can afford an entry-level home. Fleming noted that millennials, as they age into their 30s, want to become homeowners. The generation after them also will want to own homes but, like the millennials, they may make the jump later in life than previous generations, choosing to rent for a longer period of time.

What does this trend toward fewer moves mean for mortgage originators? That might depend upon whether the originator focuses on homebuyers who are owner-occupants or those who are investors.

Potential consequences

What does this trend toward fewer moves mean for mortgage originators? That might depend upon whether the originator focuses on homebuyers who are owner-occupants or those who are investors.

“This could be beneficial for landlords renting single-family homes. The biggest challenge for many landlords is replacing a tenant who moves out, so the longer a renter stays, the better for the landlord in most cases,” said Rick Sharga, president and CEO of CJ Patrick Co., a California-based consultancy focused on real estate, financial-services and technology companies.

“On the other hand, I believe this trend has a potential downside for SFR investors,” Sharga said. “The longer tenure of homeowners is a major factor in keeping homes off the market. This reduces the inventory that investors have to choose from.”

So, there’s a Catch-22. Demand for rental units continues to increase, yet lack of housing stock makes it challenging for SFR investors to add to their portfolios. Lack of inventory also has the effect of driving up prices, increasing investor acquisition and financing costs.

Whether this trend of a mobility slowdown continues is uncertain. Brookings posits that if the economy strengthens, then mobility might rise somewhat for millennials and their Generation Z counterparts. Still, the overall trend line suggests less mobility, not more, and the mortgage industry will be among the sectors impacted — maybe in ways it doesn’t yet anticipate.


  • Robert Greenberg

    Robert Greenberg is chief marketing officer at Patch of Land. He is responsible for overseeing the company’s sales and market efforts, including loan originations, branding, corporate communications, lead generation, and sales and marketing automation. Prior to coming to Patch of Land, Greenberg led the marketing efforts for Blackstone’s B2R Finance, where he helped originate more than $1 billion in real estate transactions.

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