America's domestic migrants numbered around 15 million in the years 2013 and 2014, the lion's share of them moving 50 miles or less. How those "movers" break down--as home buyers or renters--is the subject of this analysis by National Association of Home Builders economist Paul Emrath, who divvies the U.S. mobility pool into four helpful sub-groups.
- Buyers of Newer Homes
- Buyers of Older Homes
- Renters of Newer Homes
- Renters of Older Homes
The data can be a real source of leverage and understanding on housing type preference and behavior, which can help in both planning and development, as well as marketing. The good news, as mobility and migration expert William Frey notes from this past Spring's release of Census Population Estimates, is that pre-Recession migration trends have begun to re-strengthen, with signs that Millennials are starting to pick up and move on into their own households, often far from their current homes.
Renters move more often than homeowners, so it makes sense that the largest chunk of the pie chart of annual movers is comprised of renters--a combined total of about 10.6 million--while the balance of movers each year are moving from homes they own into different homes they buy.
Developers and marketers of new homes and communities might focus especially on Emrath's comments as to the behavior of former homeowners. He writes:
Former home owners account for a significantly larger share of home buyers than of new tenants in rental housing. In other words, a large share of home buyers consists of repeat buyers. This is especially true for buyers of newer homes, where repeat buyers account for 51 percent of the market. Former renters and new households account for larger shares of the home buying market for older homes, still larger shares of the market for newer rental housing, and shares even larger than that of the market for older rental housing.
Another area of insight exposed through the Census' American Housing Survey data gets at a more motivational aspect underlying mobility rates. As a reason for moving, many households seek improvement over their prior living situation. Emrath's notes:
Are movers trading up, down or sideways? In terms of the quality of the homes buyers and renters believe perceive they’re getting, the most common answer is trading up. This tendency, however, is more pronounced for buyers than for renters, and for movers into newer rather than older homes. Nearly 70 percent of buyers of newer homes say their new residences are better than their previous ones, compared to 60 percent of buyers of older homes, 53 percent of renters of newer homes, and only 43 percent of renters moving into older homes
Another perhaps more sobering detail emerges in the AHS analysis of the respective incomes of the households who're newly buying or renting, either newer homes or older dwellings. Clearly, the wherewithal among those who buy homes built more recently than 2010 sets one group in its own sphere, and this might be looked at either as a big challenge or a significant opportunity area--on the product development side--for new home and community planners and marketers.
Emrath notes:
The average income of buyers of newer homes is $123,000, compared to $95,000 for buyers of older homes, $64,000 for renters of newer homes, and $49,000 for renters of older homes.
Since the buyer pool for older homes is 6.6 times the size of the universe of buyers of new homes, the big, wide open opportunity is for builders and developers to close the gap of attainability so that households with incomes of $95,000 can trade up to new homes.
We've seen some players--especially LGI, DR Horton among site builders, and Clayton Homes on the factory-built side--go aggressively at that opportunity with success. How many others have the operational DNA to price new homes to that much bigger market of households, many of whom would be motivated to move into a better house?
