Decline in Housing-Driven Movement Ushers in Era of Less Migration

Decline in Housing-Driven Movement Ushers in Era of Less Migration

Housing

Decline in Housing-Driven Movement Ushers in Era of Less Migration

Austin Herrick · · 5 min read
Decline in Housing-Driven Movement Ushers in Era of Less Migration

By Austin Herrick

In a previous blog post, I considered how wage changes are related to the decision to move and the decline in household movement observed in the last two decades (see Figure 1 below). However, wage changes aren’t the only reason households choose to move. Changing motivations for moving are illustrative in examining the broader context of internal migration.

Figure 1: Percent of Working-Age Americans (Aged 18-64) Who Moved Within the Last Year (2000 - 2018)

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Figure 1

Source: Current Population Survey (1994 – 2018)

We examined the list of reasons given for moving in the Current Population Survey (CPS). We combined that list into several broad categories.

  • Housing Related: want better house, want to own house, cheaper housing and other housing reason.
  • Family Related: establish own household, married/divorced and other family reason.
  • Work Related: new job/transfer, commute, look for work/lost job, retired and other job related.
  • Other: includes all other reasons.

Figure 2 shows two significant findings about the motivations for moving.

  • Housing-related reasons rank consistently as the largest motivation for moving.
  • A significant decline in moving for housing began in 2004. Thus, the overall decline in movement during this period is largely attributable to the decline in moving for housing.1

Figure 2: Percent of Working-Age Americans (Aged 18-64) Who Moved Within the Last Year (2000- 2018) by Reason Category

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Figure 2

Source: Current Population Survey (1994 – 2018)

While demographics do affect the motivations of movers, the importance of housing-related reasons, and their decline starting in 2004, is consistent. For example, housing is the most important reason for movement across levels of education,2 household size and age.

To inspect why the mid to late 2000s saw decreasing numbers of people moving for housing, Figure 3 decomposes these movers into more specific reason groups. Here, we see that the decrease is driven by fewer families moving in order to own homes or obtain better housing. Interestingly, this decrease begins in 2004, years before the extreme housing market volatility associated with the Great Recession. Housing prices peaked in the first quarter of 2006, median sales price peaked in the first quarter of 2007, and the Great Recession began in December of 2007.

Figure 3: Percent of Working-Age Americans (Aged 18-64) Who Moved Within the Last Year (2000 - 2018) for Housing by Household-Related Movement

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Figure 3

Source: Current Population Survey (1994 – 2018)

These data present a puzzle—if movers’ motivation for better housing began declining in 2004, why did home sales prices and property values continue to increase? A possible answer is provided by Robinson & Todd ,3 who examine the role of non-owner-occupied housing in the run up to the housing crisis. They find that real estate as a speculative asset was increasingly becoming the domain of wealthier investors, either because property values priced out potential buyers or because investors were more frequently buying several homes.4

On the other hand, market realities do seem to explain the motivation of moving to obtain cheaper housing. This motivation increased sharply in frequency following 2006 (see Figure 3) and continued increasing into the financial crisis, significantly outpacing the desire to own a home. As the economy recovered from the recession, reasons for moving stabilized. By 2017, the desire to own a home recovered somewhat, almost matching the frequency with which respondents seek cheaper housing.

  1. Figures 2 - 3 display the percent of movers giving a particular reason for moving--slight increases imply only a relative increase in migrants, which would be true if the absolute value of migrants were still constant (because overall migration was decreasing throughout the observed period).  ↩

  2. As an illustration, the figures below compare the reasons for movement given by college graduates vs non-college graduates. We can see that the frequency of work-related explanations for movement is significantly higher for college-educated movers (this finding matches the insight that the movement wage premium is significantly higher for these workers, as explained here), while non-college-educated movers are more likely to report family-related reasons.

    Frequency of Movement by Reason: Non-College Grads

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    Frequency of Movement by Reason: College Grads

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     ↩

  3. Robinson, B. L., & Todd, R. M. (2010). The Role of Non-Owner-Occupied Homes in the Current Housing and Foreclosure Cycle. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2189551  ↩

  4. From 2004 to 2007, the income of non-occupant home purchasers rose by 25 percent (from $100,000 to $125,000), as compared to 8.3 percent of occupants (from $60,000 to $65,000). Purchasing by non-occupants also accounted for a full 75 percent of the growth in sales in the final two years (2004-2005) of the housing boom, precisely the time when migrants’ interest in owning better homes fell off. These non-occupant owners, despite better credit profiles, had foreclosure rates slightly higher than owner-occupants (because the economic and non-economic costs of foreclosure were far lower), likely contributing to the volatility associated with the collapse of the housing market.  ↩