The short answer is that we used to move from the north to the south, and for the time being we\u2019ve stopped moving.\u00a0<\/p>\n
I\u2019ve called this phenomenon, \u201cThe Great Stay.\u201d In the post-pandemic economy, we\u2019re staying in town, in state, in our jobs, in our homes. Companies are not firing and they\u2019re not hiring. Workers are not quitting. Growing families are not upsizing. Workers are not migrating across the country in search of better opportunities.<\/p>\n
Migration disrupted<\/p>\n
For many years, Americans have been moving from the North to the South, from the Rust Belt to the Sun Belt. That migration pattern exploded during the pandemic. Remote work, cheap, new housing and other economic opportunities drew millions of people to states like Texas<\/a>, Florida<\/a>, Arizona<\/a> and Colorado<\/a>. For anyone who had been thinking about making the move, suddenly during the pandemic it was an optimal time to do so.\u00a0<\/p>\n Then suddenly the move got expensive. The price of homes in the south shot up. In cities like Tampa<\/a>, it was quite common to see 45% home price appreciation in just a few years. Mortgages got expensive too. When mortgage rates<\/a> jumped from 2.8% to 7%, payments\u00a0rose even further.<\/p>\n But it\u2019s not just the cost of the house. Insurance rates<\/a> in much of the country spiked with increased natural disasters and rising replacement costs. Taxes jumped. Home goods like washing machines got more expensive. The holding costs of a home in many southern states increased sharply.\u00a0<\/p>\n The midwest and northeast aren\u2019t nearly as susceptible to natural disasters and insurance costs have held more steady. As the relative affordability benefit of moving to the South evaporated, we stopped moving.\u00a0<\/p>\n A young family in Cleveland used to buy a house from the retirees who moved to Sarasota. Those retirees aren\u2019t selling, but the young family still needs to buy. Inventory is tight in Cleveland and very high in Sarasota as a result.\u00a0<\/p>\n Jobs too<\/p>\n The Great Stay is not just a housing story. The weak housing market is intertwined with a very unusual labor market. While the unemployment rate is reasonably low, the hiring rate by companies is as sluggish as it would normally be in a deep recession. The country added only 22,000 jobs<\/a> in August.\u00a0<\/p>\n Because no one is hiring, those who have good jobs don\u2019t want to quit. The rate at which employed workers quit their jobs is remarkably low and looks more like recession than an economy growing at 3%+. Notably the quits rate is lowest in the Northeast, which is also where the days on market, illustrated in our map above, is the lowest.\u00a0<\/p>\n Before The Great Stay, I\u2019d be confident to quit my job in Chicago to move to Phoenix and get a new job. Now, they\u2019re not hiring, I\u2019m not quitting and therefore I\u2019m not moving. I\u2019ll stay, thank you very much.\u00a0<\/p>\n This weirdly slow jobs market is perhaps the result of big pandemic levels of hiring. Many companies are fully staffed and while layoffs aren\u2019t dominant, hiring is also unnecessary. We\u2019re also in the early stages of AI impact in the economy. While it\u2019s hard to tease out AI-specific impact on hiring in concrete data, anecdotally it sure seems common.<\/p>\n What The Great Stay means for buyers and Sellers<\/p>\n