NEW YORK (MainStreet) — Mao Lin Shen is staying put in the New York apartment he began leasing nine months ago, because he’s not willing to pay moving costs.
“I am not going to move even if I earn more money, because relocating itself costs so much,” Shen told Mainstreet. “There’s the realtor to pay, first and last month’s rent and a deposit, which are all sunken costs that I am not willing to pay again.” The 31-year old estimates that he would lose $7,000 if he were to relocate to a one bedroom from his current studio in a brownstone on 69th Street and Central Park West.
"My lease is up in June and if I move, it's going to be to buy not rent," Shen said.
Like Shen, many Americans are digging in their heels. The percentage who have moved across state lines has fallen by about half since the 1990s and has barely budged since 2011, according to the U.S. Census Bureau’s American Housing Survey.
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“The population growth and the number of children per household has slowed so there is less need for people to move to a larger residence,” said Robert Pifke, chief marketing officer with Real Property Management in Salt Lake City. “Young adults are delaying marriage and children, so this has also slowed new household formation and the need for moving.”
The trend of consumers reluctant to move has driven up rental rates and stunted business growth. “Free movement of labor has the same positive effect on the economy as free trade in goods,” Pifke told MainStreet. “It makes businesses more efficient which makes products and services more affordable. When products and services are more affordable, it increases demand, which in turn leads to business and employment growth.”
Millennials play a special role in the housing market, but over the past 20 years corporations have become less inclined to move staff, and when they do, incentives for moving of days gone by are no longer available.
“Millennials are one of the largest groups driving our economy currently,” said Carrie Foley, managing broker with Berkshire Hathaway HomeServices Northwest Real Estate in Seattle. “Their movement and purchasing power can have a significant impact on our housing market.”
Although Millennials have been impacted by a difficult economy and job market, 76% of them under the age of 33 were first time home buyers in 2013.
“Classic supply and demand applies,” Foley told MainStreet. “As more Millennials continue to rent and rents increase, people will find it more attractive and affordable to buy than rent especially with historically low interest rates.”
That makes sense to Shen who plans to use the services of a Millennial-aged agent.
“I’ve saved a lot of money,” Shen said. “It’s invested and sitting in a savings account and not earning much interest so buying property is a way to appreciate my money and I won’t have to pay rent that goes nowhere.”
Berkshire Hathaway HomeService has organized a group of millennial real estate agents called the REthink Council whose mission it is to educate younger home buyers about home ownership. Members include 30 rising young stars in the industry named by National Association of REALTORS.
“The younger agents prefer to communicate via email or text,” said Foley. “They also understand that their fellow millennial wants information fast and that they don't want to feel pushed or sold on any decision.”
—Written for MainStreet by Juliette Fairley