Americans are moving less often than ever before, and this new trend in decreasing mobility is having a major effect on the real estate industry.

About 11 percent of Americans moved between 2015 and 2016, a decrease of 6 percentage points from 1990 — and half the mobility rate in 1948, when the U.S. Census began tracking the statistic, according to a study by Zillow and the U.S. Census Bureau.

For homeowners, migration rate dropped from 7.7 percent in 1990 to 4.2 percent in 2016, Zillow reports. Migration has declined even more dramatically for renters: about 33 percent of renters in the 1990s moved each year; now it’s about 20 percent.

The reduction in Americans moving yearly is having “sweeping implications” on the housing market, they conclude. Fewer people moving has contributed to the country’s record low inventory of homes for sale.

Much of the change in migration rates happened between 2005 and 2011, coinciding with the Great Recession and the housing market crash. There are three factors that contributed to this decrease in mobility, and market forces have played a big role in them all, according to Zillow.

Millennials Moving Less

Young people are generally more mobile than older generations, as they are yet to be tied down to a family or a career. Young adults are four times more likely to move in a given year than older adults, Zillow reports. And while migration is down among all age groups, it’s particularly down with young people aged 24 to 34.

About 20 percent of young adults moved in 2016, compared to 28 percent in 1990, according to Pew Research. That’s significantly less than previous generations of young people: 34 percent of Gen Xers in the 1990s moved yearly, while 35 percent of Early Boomers did the same in 1981.

Why are Millennials moving less, especially if they’re not sold on homeownership? Financial constraints, as well as the job market, are believed to have played a major role.

“Labor market opportunities may be a factor,” Pew’s report reads. “Millennials were hit hard by the Great Recession in terms of job-holding and wages. For many young adults who moved in the past year, job opportunities were a prime motivation for moving, and the modest jobs recovery may not be providing the impetus Millennials need.”

Reduction in Home Equity

Another reason for a less migratory population is more specifically tied to the economic downturn of 2007: negative home equity. Since many people found themselves living in homes worth less than their outstanding mortgage, moving was not really in the cards.

And records show that negative equity does equate to less home turnover. Though this phenomenon has largely been erased during the economic recovery, Chicago and a number of other cities are still seeing their home turnover hampered by underwater homes.

“But while negative equity could help explain why the migration rate dropped during the housing bust, it cannot explain why the migration rate has remained stubbornly low during the housing market recovery,” Zillow says.

More Homes Being Rented

The percentage of single-family homes being rented out increased by nearly 7 points since the market crash, as foreclosures picked up during the crisis and investors stepped in to buy homes and turn them into rental properties.
Nearly 13 percent of homes in 2005 were rented versus 19.2 in 2016, according to Zillow. There are nearly 6 million more single-family renter homes in 2016 than there were in 2015.

“Markets that experienced the largest increases in the share of rented single-family homes between 2000 and 2015 also saw the largest drops in single-family home turnover,” Zillow says.

So how can the trend be reversed? One answer is to focus on opening homeownership options to Millennials, who, studies show, still believe in homeownership as part of the American Dream, as City Labs notes. Enticing them to buy homes can help increase home turnover and help spur homeownership in the country.