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Mortgage interest rates are at a two-decade high, but some people still want to move. Read on to find out why they’re boxing up their belongings.
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There’s no getting around the spike in housing costs over the past few years. Inflation, a shortage of houses, and soaring interest rates have all contributed to an upheaval in the housing market.
The result is that the average home price is now $416,100, up nearly 29% from mid-2020. And while the high housing costs keep many people from moving, it’s not slowing everyone down.
Some people still need to move, and the latest Redfin data shows why Americans are considering loading the moving van.
1. They want more space
Americans are apparently willing to sign on the dotted line with a mortgage lender to get an extra bedroom or another bathroom. Wanting more space was the top reason people said they’re likely to move in the next year, with 33.8% of respondents citing it as the main reason, according to Redfin.
This matches up with data showing American homes continue to grow. In the 1960s, the average single-family home was 1,500 square feet, but that climbed to more than 2,500 square feet at the end of last year.
2. To be with or closer to family
The next most popular reason for Americans’ desire to move was to be closer to family, with 22.6% citing it as the reason they’d consider moving.
Redfin’s survey shows that people are willing to move further than before the pandemic, with 26% of home buyers looking to move to a different part of the country, up from 19% before the pandemic.
3. For a lower overall cost of living
Inflation has driven prices for nearly everything higher over the past few years. And with mortgage interest rates at a two-decade high, many Americans are considering moving to lower their overall cost of living.
Redfin says 21.6% of survey respondents said a lower cost of living is why they’re considering moving in the next year.
4. To get a better deal on a home
I can relate to this one. I regularly search on Zillow for cheap or inexpensive homes in different parts of the country…I don’t find much.
The Redfin survey showed 20.5% of respondents said getting a better deal on a home is the main reason they’re considering moving. These Southern cities look like a better deal for those looking for cheaper housing.
5. To live in an area that better aligns with social values
This one caught me a little off guard because I assumed that moving for a job would certainly be on the top five list of reasons to move. However, Americans seem increasingly interested in moving to an area of the country where others share their social values.
Just over 19% of respondents are considering moving within the next year for this reason, much higher than the 15.6% who said they’re considering doing so for a new job.
How to plan for buying a home
No matter your reasons for wanting to move, if you’re planning to buy a house, there are a few steps you can take now to help yourself get ready.
Make sure your credit is in good shape: The better your credit score, the better your chance of securing a loan and getting a lower mortgage interest rate. Pay your bills on time, pay off credit card debt, and dispute any discrepancies on your credit report. Check out The Ascent’s guide for increasing your credit score for tips.Save as much money as possible: Mortgage lenders will assess your credit and what assets you have. So, lowering your debt is part of the equation, as is boosting your savings. You can get an FHA loan with as little as a 3.5% down payment, but lenders will also want to see you have money in a savings account to cover other home-related expenses.Shop around for the best lender: While there are standard lending practices, not all lenders will look at your savings, credit history, employment, and debt in the same way. That’s why it’s essential to compare the best mortgage lenders for your needs.
If you end up moving, good luck with the process (I’m busy the Saturday you plan on moving, by the way), and don’t forget that even if you can’t score an especially desirable interest rate now, there are options to refinance your mortgage in the future.
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