CHM Blog

America’s great standstill

“Go west, young man.” When newspaper man Horace Greeley used those words long ago, he was talking about opportunity. Mobility. He would not, however, have applied them to today’s economic snapshot. Why? Because according to Wall Street Journal’s Konrad Putzier and Rachel Ensign, Americans are experiencing their lowest mobility rates in recorded history.

The journalists speak of the economic ripple effects that threaten the nation's traditional dynamism. “Only 7.8% of Americans moved in 2023, the lowest rate since Census records began in 1948, compared to roughly 20% who moved annually in the 1950s and ‘60s.”

None of this is the result of a single factor, however. The frozen housing market is creating a cascade of problems; growing families cannot upgrade their homes, empty-nesters cannot downsize, and first-time buyers remain locked out entirely.

Many homeowners secured favorable mortgage terms around the time of the pandemic, when rates were low. Now? They know they may never get that deal again and are staying put. Moving to a larger home could easily double monthly payments, even for families desperate for more space.

You wouldn’t think today’s job market would be a factor, but you’d be wrong. Remember that post-pandemic hiring boom — back when workers could name their price? Well, the employment landscape has cooled dramatically. “A measure of hiring, quits, and layoff activity across white-collar industries fell to its lowest level since 2009,” say the journalists. “The probability of switching employers in any given month has dropped from 2.8% in the late 1990s to 2.3% in the 2020s.”

They refer to it as an "insider-outsider divide,” where current employees cling to their positions while new graduates struggle to break into the workforce. All those kids still giddy from throwing their graduation caps in the air? Right now they are underemployed — more than three times as likely to remain underemployed a decade later compared to those who quickly secure good jobs.

Putzier and Ensign use the case of a recent University of Pennsylvania engineering graduate who applied for more than 200 jobs, accumulating credit card debt while living with his girlfriend's family. Oh, he did get an offer at last. But it required relocation to another state — without assistance and offering a salary insufficient for the move. So he declined. Eventually, he found local work, but his experience illustrates what today’s opportunity snapshot looks like.

The journalists found that expensive housing discouraged so many workers from relocating for better jobs that it weighed on U.S. gross domestic product. “When people cannot move for job offers or to cities with better opportunities, they typically earn less. When companies cannot hire talent from different states, corporate productivity and profits suffer.”

Why all this at once? First off, the U.S. population has aged, and older people move less frequently. More households are now dependent on two earners, making relocation more challenging. The biggest drop, however, has occurred in local moves within the same county, which have declined roughly 47% over the past three decades, according to the journalists.

But what, you may ask, about the pandemic-era surge in relocations to the suburbs and remote areas, where workers could buy a home at half the price while enjoying a healthy remote worker income? Temporary. “Despite well-publicized stories of urban flight, the overall trend toward decreased mobility continued,” says this report. By 2024, movement rates remained near historic lows.

Housing affordability, of course, plays a major role. The journalists point out that for much of the 2010s, a median-income family buying a median-priced home spent 30% or less of their earnings on housing costs. That share has now jumped to 39%.

This mobility crisis particularly impacts young workers as they attempt to launch careers. The promise that college degrees guarantee employment has proven to ring hollow for many recent graduates who find themselves overqualified for available positions, yet unable to access better opportunities elsewhere.

For generations, Americans chased opportunity by moving between cities and states. Companies were once quick to hire and fire compared to their international counterparts. But like a plane whose engine just stalled, many people are in a surreal freefall — trapped in unsuitable housing, unsatisfying jobs, or extended family arrangements while searching for work.

As hiring has disappointed and GDP growth has slowed, the connection between mobility and prosperity is evident. Without renewed movement in both the housing and job markets, America risks losing a key competitive advantage that has historically driven innovation and growth.

WSJ, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market worsened by -6 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Geopolitical and 3) Domestic News.

1) The Fed: This week is the Jackson Hole Economic Symposium. We will hear from every single member of the FOMC this week and get a speech from Fed Chair Powell at the end of the week to close out the symposium. We will also get the Minutes from the last FOMC meeting on Wednesday.

2) Geopolitical: The financial markets are watching to see what happens with the meeting with Ukranian President Zelensky Monday and what can be worked out with Russia after last week's meeting with Putin.

3) Domestic News: We have a very light week for meaningful economic data. We have a lot of housing news but that is not something that will move the needle on rates. The 20Y Treasury bond auction is the most significant calendar event.

This Week's Potential Volatility: High

This morning markets have started under a little pressure. Volatility has started at moderate levels but will likely increase later in the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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