Best available home may be one you already have
NEW YORK » 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,” 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 mishoused unit is a two-bed, one-bath duplex in Boulder, Colorado, 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: Bogolub and her partner, Colin Sturrock, in a room that holds their 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 to sleep at night.
“The plan was graduate, get jobs, move,” said 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 U.S. housing market today. Boulder rents have risen more than 15% in the last year. Boulder County also lost more than 1,000 homes to wildfires in December, making competition for housing even stiffer. 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.
“That's what's sort of mind-boggling,” said 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 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.
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% (half have a rate at 4% 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.