Why People Move and What It Means for Real Estate Investors

The US Census put together a fascinating report a few weeks ago about the reasons why people move. The Census called thousands of people around the country who reported a change of address and interviewed them about their move, and compiled the results.

Here are the results of the most relevant question to us:

What These Results Mean

Certainly, some of the results are obvious — when about 1 in 8 people moving is doing so strictly to “upgrade,” for example, you can be assured that having a property good enough to upgrade into is a solid business move.

Major Life Changes

But less obvious are the between-the-lines factors. For example, “Establish own household,” “New job,” “Change in marital status,” “Lost job,” “Retired,” and “To attend/leave college” are all different versions of “Experiencing a fairly dramatic life change” — and together they make up for a huge 27.9% of all people moving. If you can discern what makes a property good for “major life changes,” you can benefit.

One example: social connections. People with a new spouse, a new job (or new lack of job), or new(ly completed) stay at college are all generally looking for new friends — their old crowd isn’t as relevant as it used to be, and people generally don’t like to remain alone for long. If you can offer or prospect some form of connection, be it a community clubhouse on the grounds, a membership to a local gym or other socially active scene — or anything else to make it easy to make new friends — you can count that as a potentially strong selling point.

Movin’ On Up

Similarly: “Wanted better home/apartment,” “Wanted better neighborhood/less crime,” and even (albeit to a lesser degree) “Change of climate” all reflect a similar basic desire — between them, 18.1% of all people who are moving are specifically looking to upgrade. Selling based on quality rather than price has a strong pull for these people.

Compare to 12.2% (the total of “Wanted cheaper housing,” “Lost job,” and “Foreclosure/evicted”) who are hunting based largely on price, and you can make a pretty clear indication that in today’s market, being the upgrade people want to move into is a strong place to be.

Location, Location, Location

If 16.5% of all people moving are doing so because of a new job/job transfer, to reduce their commute, or because they’re looking for/have just lost a job, you can guess that accessibility is a strong selling point in today’s market. Being able to advertise that you’re minutes away from a major thoroughfare is a strong play, especially if the building is in an otherwise suburban or rural area.

Trend Tracking

If you look over the past few years’ data, you can see a few distinct trends.

• The number of people across the various “upgrade’”categories mentioned above is decreasing, which most likely means that people are getting comfortable with the situation they’re in.
• But the number of people who are seeking independence (“Wanted to establish own household,” “Wanted to own, not rent”) is increasing — probably because, as the economy recovers, they feel able to pursue that goal.
• Finally, pay attention to the small number under the category “retired.” It’s not a lot of the market — but notice that it’s more than doubled in the last three years, from 0.3% to 0.7%. That’s the beginning of a large trend, as the Baby Boomers are hitting retirement age every day, and the number that are choosing to retire per day is predicted to go up and up until 2025. That’s at least a decade of safe-to-predict growth in the “moving because retiring” category — so while it’s not a huge market force today, it’s worth putting in your long-term view and taking into account over the next few years.

Read more at biggerpockets.com

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