The moving trucks may not be as busy as they once were, but they’re still rolling. The number of households moving between cities fell 4% year-over-year (YoY) in Q2 2024, a notable improvement from the 15% drop seen this time last year, according to Bank of America deposit data. However, Gen Z and lower-income households now represent a larger portion of those moving.

Feeling the squeeze: Blame it on the not-so-hidden costs of homeownership. While many mortgages have fixed rates, expenses like property taxes and insurance premiums have increased, especially in Sun Belt metros that have seen outsized home price gains in recent years. These rising costs leave homeowners with less cash to fund a potential move.

• More than 25% of homeowners with mortgages are considered “cost-burdened,” spending over 30% of their income on housing costs, according to a 2023 analysis of US Census data by the Chamber of Commerce.
• Median mortgage payment growth for non-movers consistently ran around 3% YoY in Q2 2024, with some Sun Belt metros like Charlotte and Tampa seeing even bigger increases, per Bank of America data.

Home insurance premiums jumped 20% on average between 2021 and 2023, with another 6% hike expected by the end of 2024. Florida homeowners have been hit the hardest, saddled with an average annual premium of nearly $11K in 2023 — over $8.6K more than the national average.

Housing-Linked Industries Take a Hit

These soaring expenses affect more than just relocations. Fewer moves and a larger share of younger, lower-income movers are reducing spending in home-related categories like furniture and appliances.

• Bank of America card data shows average spending per household on furniture in the six months before a June 2024 move was down 10% YoY.
• Electronics spending also declined, remaining below last year’s levels for the six months leading up to a June 2024 move and finishing 3% lower during the month of the move.

This week, WayfairW

reported earnings, with its CEO saying their “credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the Great Financial Crisis.”

Falling prices share some of the blame. Furniture and bedding costs slid 4.6% YoY in June 2024, while appliances were 3.6% cheaper. So, the drop in spending stems from both declining volumes and deflation.

Interestingly, home improvement spending remains high, holding substantially above pre-pandemic levels. The DIY boom sparked by lockdowns seems to have enduring power.

Election Jitters Freeze Homebuying

The upcoming election is also causing many potential buyers to hesitate. A Veterans United Home Loans survey found that 38% of homebuyers are delaying their search until after Election Day, with the uncertainty weighing even heavier on civilians’ minds than veterans. Overall, 60% of prospective buyers are factoring the election into their homebuying plans.

If the Federal Reserve cuts interest rates as expected before year-end, fence-sitting buyers will face a dilemma: take advantage of lower rates pre-election or wait out the political uncertainty.

Here’s how things can improve: A rebound in relocations by higher-income households could boost discretionary spending on home goods. If insurance premiums and property taxes cool off, easing cost pressures on homeowners, more may be willing and able to move. An election outcome that brings policy continuity and calms consumer fears could also renew interest in home purchases and relocations. For the housing market and adjacent sectors, a lot hinges on how these trends unfold.