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Pull Up Stakes, Move Where Home Prices Grow

Written by on Thursday, 01 January 2009 6:00 pm

Americans are staying put more then ever, but when they do move many of them do so for housing-related reasons, say, to buy a new home or find a better neighborhood.

And, if previous migration patterns are any indication, those trends could bode well for those seeking homes with equity gains to come. It's also pretty good news for housing markets rife with inventory.

That's all provided home buyers can get to market with the right stuff.

Here's the scoop.

"American Mobility Who Moves? Who Stays Put? Where’s Home?" a new Pew Research Center Social & Demographic Trends survey found that most Americans have moved to a new community at least once in their lives, but a record low number changed residences in recent, more economically troubling years.

In 2007, when Americans did move, their net migration patterns reveal much moving to the South, with far fewer moves into the West and Northeast, according to Pew.

Also, as the two coastal markets' home prices began to sink, home prices held best where net migration was greatest, in the South, according to the Federal Housing Finance Agency's (FHFA, formerly the Office of Federal Housing Enterprise Oversight, OFHEO) Home Price Index (HPI) for the last quarter of 2007.

Home prices played a key role in the shift South, according to an earlier report this year from the Brookings Institution, "Housing Bust Shatters State Migration Patterns".

The Brookings report said the current migration pattern shift is a reversal from a half decade ago when Americans migrated to booming housing markets in the West and Northeast, often in search of lucrative real estate investments, including first and second home buys with the promise of skyrocketing appreciation.

The current reversal of the rush-to-boom-towns pattern has left behind greater inventories of more affordable homes as Americans head for previously more affordable housing markets with greater price strength.

In 2008, home prices have remained strongest throughout much of the South, according to the FHFA's HPI for the third quarter of 2008.

Alabama, Kentucky, North and South Carolina, Oklahoma, Texas and Tennessee, all revealed price increases of 1.4 percent or better, year-over-year in the third quarter this year. Likewise, North Dakota (at 4 percent, the highest in the nation) and South Dakota (3.9 percent), Montana, Wyoming and Maine all saw some of the greatest price increases in the nation during the same period. Other southern states Arkansas, Kansas, Louisiana, Mississippi and West Virginia, along with Iowa, saw smaller price gains, but gains nevertheless.

The rest of the nation's home prices by state were in the red or flat.

"In sum, there appears to be a migration correction going on. We're at the beginning of a leveling off of migration between unaffordable and affordable America. As with the broader economy, we don’t know how much longer it will last," Brookings reported early this year.

According to the more recent Pew report, net migration to the South appears to be picking up steam.

Pew reports while the 2007 migration pattern shows decidedly lopsided net migration to the South, the earlier 2005-2007 pattern revealed less lopsided migration, but nearly equal net migration from one region to the next.

The Pew report examined U.S. Census data, but also surveyed 2,260 Americans to learn more about the wheres and whys of migration patterns.

The ties that bind

The Pew report found that while the migration trend is toward more affordable housing markets with greater price strength, fewer people are pulling up stakes.

Only 13 percent of the U.S. population changed residences between 2006 and 2007, the lowest share since the Census Bureau began to publish statistics on this topic in the late 1940s.

But that means those who do migrate for housing are likely to find less competition and more bargains.

"The annual migration rate, which held at 20 percent through the mid-1960s, has drifted downward since then before hitting its low last year, with the recent housing market slowdown perhaps playing a part," Pew found.

Pew's main findings also include:

  • Movers most frequently said they pulled up stakes for better job or business opportunities (44 percent); because their new community is a good place to raise children (36 percent) or because they have family ties there (35 percent).

    The report also cites Census data which says "Most Americans who move relocate within the same county. About half of all moves are for housing-related reasons, such as buying a new house or moving to a better neighborhood."

  • Those who did not move said they remained because of family ties (74 percent); the desire to remain where they grew up (69 percent) and their belief that their communities are good places to raise children (59 percent); for job or business opportunities (40 percent).

  • Four-in-ten Americans say they are very likely or somewhat likely to move within five years. Among those especially likely to say so are younger people, unmarried Americans and the foreign born.

Making a savvy move

To make a move elsewhere pay off:

  • Learn the game. Obtaining general knowledge about the home-buying process and the real estate market where you'll live. Buyers who don't know the market tend to low ball and alienate sellers.

  • Get local smarts. A buyer's market can be designated by a small community, larger region or greater geographic area. Local smarts will prevent you from paying a seller's market price in a buyer's market.

  • Buy smart. Buy the least expensive house on the best block; buy into the least expensive neighborhood in the best community; buy into the least expensive city in the best region.

  • Bring money. Even motivated sellers aren't going to wait around for your money to show up. Get your credit report checked and in order. Get your loan approval guaranteed. Lock in your mortgage rate.

  • Buy for keeps. Buy because you need a home, because you plan to stay put for awhile and enjoy the appreciation end of your investment.
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  About the author, Broderick Perkins

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.