Despite the Housing Boom, Travel Rush, and Revenge Spending Spree, Why American Mobility Is At A Historic Low

With home affordability levels not seen this low since ’89 according to the WSJ, many potential homebuyers have been priced out of the market since the home buying spree of 2020 and there seems to be little room in sight for negotiation.

Luckily, with higher mortgage rates comes a cooling of inventory and supply, alleviating many eager homebuyers to catch a deal in less populous states across the Heartland and Sunbelt. In addition, mortgage rates eased from their 13-year highs in June, allowing potential buyers to swoop in.

However — whenever time and prices are constrained, it’s a negative leading indicator. When one is cash strapped and or feels pressured/rushed into making any financial decision, let alone probably the largest one of their life up to this point, this can be a tricky period to navigate and predict when home prices will cool.

Accomplishing a prized milestone of the American Dream seems like a far stretch to many first-time homebuyers who have been feeling the crunch of inflation, climbing record home prices, and now higher interest rates for the first time in a few decades. Compared to the last few years, given interest rates were at rock-bottom levels in 2020–2021, prices were still relatively priced compared to the record-setting delusional valuations we’re still seeing today. With there’s an abundance of cheap capital, it’s harder to identify an asset’s intrinsic value.

With existing-home prices jumping 46% nationally in the past three years according to NAR, not only are Millennials feeling the punch but executives as well. These executives hailed from Silicon Valley who have led the tech exodus alongside their employees have a change in plans on a different scale. Although these billionaire founders and executives aren’t leaving due to higher prices, their decisions are primarily driven by the high level of uncertainty in this bearish environment and extensive sell-off with their unprofitable unicorns.

Many founders of prized startup darlings of the pandemic from Instacart to Robinhood have decided to take their hefty pay packages and move on. Although they have a sturdier economic cushion than potential homebuyers in their twenties, many analysts believe they are making the jump too quickly, especially since the good and bad times don’t last forever. These days even during a resilient job market and unexpected equity rally, people are moving in all kinds of directions however the majority of American workers are still staying stagnant.

This corporate shift alongside the home price surge is leading to a lack of movement on various fronts across multiple income classes. Luckily with the resilient labor market, the economy is still staying strong on stable ground.

Home Bound

Due to rising prices across various markets, market jitters, overall heightened certainty around a looming recession and the Fed’s future round of rate hikes, many Silicon Valley executives are calling it quits while future and current homeowners are staying put.

Given higher prices eat into lower-income workers’ paychecks more than with any other income class, they are less likely to be looking for a real estate deal and buy into the market today. Similarly to lower to middle-class Americans who own at least 20% of their primary residence, they are feeling the pinch as well. Instead of expanding or buying another property, their priority is to fully pay off their home and get out of debt as quickly as possible while inflation can work for them.

Back in 1948, roughly a fifth of Americans moved. Today, due to the pandemic’s wave of remote work and surging home prices, migration habits have flipped and in 2021, only 8.4% of Americans moved. American mobility has been halved in less than 4 decades! Six in 10 people who move stay within their county and eight in 10 stay in-state these days.

There are several factors, most notably driven by the economic environment we’re in which plays the largest role in dictating whether Americans should go or stay. Although lines in coastal city retailers and packed airports are busier than ever before as Americans venture out to enjoy life again for the first summer in 2 years, when it comes to life’s big moves, Americans are staying cozy and comfortable.

Alongside hefty costs and the burden of debt as main drivers, there have been additional factors that have led to a decline in movement across the U.S.:

-Convenience of WFH

-Aging population

-Lack of reliable and cost-friendly health care

-More advanced educational degrees and higher-ed lead students to live longer and closer to home

Although living near or at home can be seen as a luxury in itself, if more of the population chooses not to venture off into new pastures, growth, expansion, innovation, and capital won’t be as efficiently created or distributed affecting sociodemographic shifts, trends, and progress down the road.

Everything that is meaningful in life is worth taking a chance on. The American Dream is all about risk calculation and chasing what you are willing to lose. Becoming too comfortable on the couch and or WFHing in your childhood bedroom aren’t as beneficial to your own success and lifestyle either. Cheap becomes very expensive in the long run, even if you are temporarily saving on the commute or move.

Success through a promotion, bonus, raise, etc. is a function of the relationships you cultivate that are typically made outside of the home such as in the office. To cure your mental state and boost your success, relationships, and lifestyle means getting out and meeting others which can lead to even stronger productivity down the line. Offices to happy hour gatherings don’t offer an immediate benefit or return on investment to companies, however, they offer something priceless that cannot be replaced: employees’ happiness, retention, and appreciation. We are social creatures after all and are required to change and explore. Within your means, make it a priority to meet new people and try something new before it’s too late.

Movement doesn’t have to entail homeownership. It can be as simple as spending more days in the office. You may be less productive and efficient but you will be seen. 

Being agile, adaptive, and getting out of your comfort zone are actions we can all try these days which will yield the best ROI in the end for your capital, mental state, longevity, and career later on.