Why Do People Move: Jobs or Housing?

REAL ESTATE TOPICS

By RICHARD FLORIDA

TheMuuj/Flickr

Why do people move? Is it for jobs or is it for housing?
It’s often assumed that people move to get better jobs.  But Census data show the main people reason move is to gain access to better housing. The issue is sometimes posed as a chicken-and-egg question: What comes first, people or jobs?
A new study published in the journal Urban Studies takes a close look at the connection between these two types of moves – moving for jobs versus moving for housing.  The study, by University of California, Irvine, social ecologist Jae Hong Kim, used American Community Survey (ACS) data and data from the Longitudinal Employer-Household Dynamics (LEHD) to get at the interplay between the two.  His data cover 342 metropolitan areas and span two periods, before the Great Recession (2005-2007) and during (2008-2010), to deal with the effects of the economic crisis on mobility. Kim ran a series of statistical analyses to sort out the relationships between job and residential mobility.
The upshot: the two are more closely related than we might think. Moving for a job is associated with moving to find new housing, though the reverse is less common.
The first chart below shows the connection between job and residential mobility for the 2005-2007 period, before the recession. The line slopes upward and to the right, indicating a linear relationship, and the correlation is .322. According to Kim’s more detailed statistical analysis for this period before the Great Recession, residential mobility was influenced by a region’s job mobility, but job mobility was not as affected by residential mobility.

(Kim)

Kim’s analysis further found demographics to play a role in determining residential mobility in this 2005-2007 pre-recession period. Not surprisingly, younger cohorts 15 to 34 years old, more highly educated people and white people were more likely to move during this period. The price and age of housing also had an effect on mobility, with lower rates of mobility in metros with pricier and older housing. Regions with larger businesses and more low paying, less skilled jobs in construction and service businesses experienced higher rates of mobility before the recession. Interestingly, Kim finds commuting time to have no statistically significant relationship to mobility during this period.

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Kim finds the effect of residential mobility on job mobility to be less significant. As he writes: “Job mobility during the 2005–2007 period (i.e. before the recession) is also found to be affected by residential mobility, although the significance and the magnitude of this effect are much weaker than those in the opposite direction.”
The second chart shows the relationship between job and residential mobility during the recession years, 2008-2010. Again the relationship is positive and statistically significant, though not quite as strong, with a correlation of .274.

(Kim)

Residential mobility in this recession period was again influenced by job mobility and also by the age and cost of housing, according to Kim’s analysis. But it was not statistically associated with younger age groups. This is likely the consequence of the economic downturn. According to Pew Research, 21.6 percent of adults ages 25 to 34 lived in multi-generational households in 2010, up from 15.8 percent at the turn of the millennium, indicating that fewer young people had the means to move during that period.

"[W]orkers tried to hold their jobs during these years given the extraordinarily tough job market situation, even when they needed to or wanted to change their living places."

In an even more significant shift from the previous years, Kim finds the effect of residential mobility on job mobility to disappear during this 2008-2010 period. This is a likely result of the recession, when, as Kim writes, “workers tried to hold their jobs during these years given the extraordinarily tough job market situation, even when they needed to or wanted to change their living places.”  This could also be the result of workers in these places being unable to sell their homes.
The third chart looks at the relationship between the change in job and residential mobility over the entire 2005-2010 period. It indicates a positive, though relatively weak relationship, between the two.

(Kim)

The big takeaway: Changing your job appears to influence whether you move more than changing where you live influences changing your job. This makes sense after all. In many cases, you can change jobs without changing where you live. And finding a new place to live is, in most cases, a far more expensive proposition than finding a new job. The pattern is affected by economic circumstance, with people less likely to leave jobs or be trapped in place by their housing during economic downturns.
Instead of trying to shore up or bailout the housing market during downturns, say by keeping mortgage rates low, it may make more sense to help people move to places with better job opportunities.