I wrote a column that came out on Aug. 20 talking about moving trends around the country focusing on Florida and Manatee County. This week I’m going to talk about how mobility around the country is stalled and the effect on the economy.
Just to be clear, moving trends are where people are moving to and are separate from how many people are actually moving. As far as Florida, there is a 2% annual growth rate over the past five years. Manatee County is growing as well with a steady stream of new residents pushing into eastern Manatee buying much of the new construction.
However, as much as we may be growing with incoming residents, most of the country is experiencing a slowdown in relocations. In the 1950s and 1960s, 20% of Americans would move each year. There was a slowing down after this because the population was aging and that generation tended to move less. By 2019, the year before COVID-19, 9.8% of Americans moved. In 2023, only 7.8% of Americans moved, the lowest rate since U.S. Census records began in 1948, and 2024 has held steady.
American workers have always been willing to relocate for better job opportunity and young college graduates have also been willing to move for the same reason. I worked in the relocation end of real estate in the early and mid-1990s for almost 10 years and it was a thriving business, with several large relocation companies offering their services to corporations. Now, however, relocation packages are less generous, and potential employees can’t afford to close that financial gap and accept a job requiring a relocation. In addition, most households need two incomes now, making relocation for one member of the household more complicated.
So, what’s happening now, why are more people stuck in place in their homes and in their careers? We all know the housing market has stalled with the exception of pockets and areas that still thrive. Because of this, homeowners are in homes that are too small for them and in jobs that aren’t providing upward mobility opportunities.
Young people just entering the work force can’t afford a home and some even struggle with rent. Existing homeowners may have a low percentage mortgage and are not willing to increase that monthly expense and move up and older generations can’t find buyers for their family homes, depriving them of a much-needed downsize.
In the not-too-distant past through the 2010s, a median-income family who bought a median-priced home spent 30% or less of their earnings on housing costs according to Redfin. That housing cost was 39% last year.
None of this is good news for the economy. Corporations need new blood and new ideas and not being able to recruit the next generation into these jobs stagnates their business. And young employees need the experience and upward career track to move on with their lives.
Sept. 16-17 is the next meeting of the Federal Reserve. Reuters has surveyed economists who are mostly in agreement that there will be a drop in interest rates in September and another one before the end of the year. So, September is the month to watch; if it happens, the stock market will love it and so will first time-home buyers.
We definitely need something to unclog the bottleneck in the real estate market. If we can get those first-time buyers in it will gradually trickle up the real estate ladder and get the much-needed mobility the country needs.
