I was recently asked what happens if people in the US just stop moving…like completely. Would that ever happen? This is a great question…is it possible that there would ever be an event which would make housing come to a total stop? Well, I would argue we just had a pretty good test with Covid and the answer is a resounding “NO!”. Last year while everyone was in lockdown and masked up, my team and I sold dozens of homes. This particular question fails to understand the fundamental nature of housing and why a lot people move. Contrary to what you see on HGTV, many people are moving not due to preference, but rather circumstance.
The fact is that sellers will ALWAYS need to sell (short of a zombie apocalypse) and below are the 6 inevitable reasons why:
Death – This one is fairly obvious. When people die, there’s no longer a need for the home unless there are people left behind. But even when there is, often times the remaining party is unable or unwilling to maintain the property either from a maintenance or financial standpoint. If the home is vacant, it’s usually left in a will and the beneficiaries don’t want the home either; forcing a sale.
Divorce – They say over 50% of marriages end in divorce. That’s a lot of homeowners! Much like above, the motivation to sell here is logistical AND financial. The problem is that most married couples buy a home together, but when there is a divorce, one needs to move out. Sometimes, there is a compromise reached between spouses in the spirit of keeping the kids in the home (or school district). This is obviously the most optimal outcome given the circumstances but a home sale (or at least a strong consideration of one) is usually in the mix in these scenarios.
Job Relocation – This scenario brings a lot of homes to market depending on your area due to employees coming and going. Outside of Philadelphia where I am, there are numerous industries including pharma, tech, financial etc, which have people being transferred constantly. If someone is transferred, it is rare they will want to retain the home unless they know it is temporary and will be transferred back at some point. In that case, it can be prudent to rent the home and keep it, but this is a rarity. Even in the cases where they will be moving back, they may just allow the employer sort out all their housing via a relocation company.
Job Loss – Somewhat the same as above, but different because this is almost a purely financial motivator. No job means no income which means no ability to pay that hefty mortgage and deal with the associated costs of owning a home. More people than you might imagine will stay put and default or try to muddle through on credit because if they have no job, their options are fairly limited. They can’t get a loan and they won’t be able to assure a landlord (rental) they can pay for a lease. Another avenue for this homeowner is to attempt a loan modification through their lender.
Medical – Life throws all kinds of things at you. Financial hardship, disability, family issues, substance abuse…you name it I’ve dealt with it. I’ve had people sell their home to put their kid through rehab…someone became paralyzed and need one story living… parents succumb to dementia… These are the unexpected things, but they move real estate and that’s part of the gig of being a realtor.
Babies – This is the only one where it is by choice (hopefully). Babies mean homeowners eventually need more room, a different style of home or eventually have to evaluate their current school districts. A young couple with no children can live in that hi-rise condo in the city, no problem. But once the kiddos arrive, the idea of strollers, groceries and parking becomes the things of nightmares. LOL. Let’s face it, babies change everything, including housing.
So there you have it. For the buyers out there wondering if there would ever be effectively zero homes on the market, take heart that there will always be inventory to some extent.