Determinants and Consequences of Moving Decisions for Older Americans

Abstract

The lore on whether older Americans move is mixed. While the familiar stereotype is that retirees flock to Florida or Arizona, prior studies have found that their home equity rises modestly over time, suggesting that they tend to stay put. This paper examines moving trends, determinants, and consequences using the original cohort of the Health and Retirement Study (HRS). We find that a full 30 percent of homeowners in the HRS cohort move over the 1992-2004 period, but most moves occur close to home. Overall, two types of movers emerge from the analysis -those who affirmatively plan to move and those who react to changing circumstances. As proxies for these two types, this study uses the presence or absence of a negative shock, such as death of a spouse or entry into a nursing home. Our results show that the factors that help determine a move are similar for both groups, while the consequences of a move vary. Homeowners with shocks are more likely to discontinue homeownership and reduce net equity, supporting the hypothesis that households may view housing wealth as insurance against catastrophic events. Finally, while movers in both groups of homeowners experience improvements in psychological well-being, movers with shocks are impacted most by the shocks themselves.

Are Homeownership Patterns Stable Enough to Tap Home Equity?

“…17 Using the Retirement History Survey, Venti and Wise (1989) find that around 27 percent of homeowners ages 58-63 moved over 10 years. Calvo et al (2009) find a similar 10-year rate of movement (30 percent) among 51-62 year olds using the HRS cohort. Using a different dataset (the PSID) Banks et al (2007) find a similar rate of movement (32 percent) among homeowners ages 50+ over a 10-year period, with most movers changing homes only once.…”

“…9 Clark et al (2003). 10 Venti and Wise (1989, 2000, 2004; Calvo, Haverstick, and Zhivan (2009);and Costa-Font, Gil, and Macarilla (2010). 11 Heiss, Hurd, and Borsch-Supan (2003) and Fisher et al (2007).…”

Homeownership, Social Insurance, and Old-Age Security in the United States and Europe

“…While acquiring a home and building home equity is a precondition for using a home as a source of old-age security, the extent of the welfare-enhancing potential of a home depends on the ability to extract liquidity from it. Traditionally, this has been achieved by selling an existing property and either purchasing or renting a smaller property (i.e., downsizing (Calvo, Haverstick, and Zhivan 2009;Munnell, Soto, and Aubry 2007;Sass 2017).…”

Are homeownership patterns stable enough to tap home equity?

“…4 Munnell, Soto, and Aubry (2007). 5 Calvo, Haverstick, and Zhivan (2009). 6 Butrica, Goldwyn, and Johnson (2005).…”