| |

Richard Green Contributor


Opinions expressed by Forbes Contributors are their own.


Contact Richard Green


Business 846 views

Why Aren't People Moving? Does It Matter?

Three years ago, Raven Molloy, Christopher Smith and Abigail Wozniak published an article that documents the extreme slowdown in mobility.  The decline in mobility can be summarized in a chart (see below).

Note that the decline in mobility started long before the great recession, so the economic crisis was not the principal source of people’s stickiness.  Molloy, et al. find that the decline in mobility is consistent across age groups, ethnic and racial groups, educational status and marital status, which means that the usual sociological explanations for mobility are not driving the result.  A group of students and I are looking at some possibilities, such as differences in wages and house prices across states, to explain mobility, and nothing is working very well yet.   Greg Kaplan and Sam Schulhofer-Wohl suggest that people are better informed before moving, and hence make fewer moving “mistakes.”  They also argue that industrial composition across cities  is becoming more homogenous, and therefore people have less incentive to move owing to variations in employment opportunities–they claim their conjecture explains between 1/3 and all of the decline in mobility between 1991 and 2011.

mobility 2 (1)

In any event, the reduction in mobility seems pretty permanent, and if it is, it has pretty profound implications for the real estate market: residential real estate transactions will continue to be depressed so long as mobility is depressed.  The impacts on new construction will be small, because new construction is overwhelmingly about new households (and old houses wearing out).  The impact on prices is likely minimal too–while lower mobility means fewer buyers, it also means fewer sellers.  There is no reason to think that demand will change any more or less than supply. Consider the stock market, where some of the worst days for prices have also been some of the largest transaction volume days.

But people, upon starting their own households, are staying in places longer.  This means that the broad outlook for those in the real estate brokerage and mortgage brokerage industry is not good.






Post Your Comment

Please or sign up to comment.
