According to Pew, fewer people moved this summer compared to last summer in every single state in America. In some states — like New York, Maryland, Louisiana and California — the decrease was as high as 13% or 14%.
Not only has soaring inflation pushed up the price of everything from packing tape to futons, but both rents and mortgage rates are rising too.
So, if you’re considering a move, should you follow the herd and stay put, or does this dynamic present an opportunity to relocate now that so many others are not? GOBankingRates asked the experts.
The Calendar Says the Time Is Right
Across America, spring and summer are the peak seasons for real estate. When the weather cools, so does the market. Although there are far fewer homes listed for sale in the fall and winter, there are also far fewer buyers competing for them, which presents opportunities.
“Typically, we recommend moving during the months of September to late April,” said Shaun Martin, owner and CEO of We Buy Houses.
It’s not just the real estate inventory itself. Thanks to the typical rental-contract timeline, industry-adjacent service providers aren’t nearly as busy in the off-season, so they lower their prices to draw customers.
“This window is very cost savvy since it’s the time when there are fewer movers, as most leases start either in the fall or spring,” said Martin.
But that’s just a generalization. Do your homework — because people who do literal homework throw that dynamic off in towns that play host to universities.
“This varies depending on the city you are relocating to, as college areas usually have renters starting their leases in September, which means prices are definitely high,” said Martin.
The elephant in the room for anyone looking to buy is the Fed’s action to fight inflation — interest rates are rising at a pace not seen since the early 1980s.
“The property market in late 2022 is quite different from early in the year,” said Peter Bieda, COO of FHA Lend. “The average interest rate on a 30-year fixed-rate mortgage hit a 14-year high of 6.29% on September 22, according to Freddie Mac.”
That doesn’t allow you to sell your house for any more than you would if rates were back at 2%, but you’ll have to pay a whole lot more to finance one when it comes time to buy.
“Many potential buyers are taking a step back and reevaluating their capacity to purchase a new house because of rising interest rates, which are increasing monthly mortgage payments,” said Bieda.
Today’s rates are far from the highest they’ve ever been, or even the highest in the last 40 years. However, they’re exorbitant compared to the lows they reached during the pandemic’s peak, and those lows truly were historic.
Millions of people seized the moment and locked in those low rates by buying or refinancing. In either case, it takes years to recoup the upfront costs no matter how low the rates may be. If you were part of that crowd, relocating now means you’ll eat much of those losses only to start the whole process all over again.
“There is no need to rush into selling your property if you are one of the numerous homeowners who have relocated or refinanced in the last several years,” said Bieda.
According to CNBC, home purchase cancellations — buyers backing out of their contracts — topped 15% for two months straight in July and August. Those are extraordinary numbers, which most experts attribute to the fact the mortgage rates more than doubled from 3.3% at the start of 2022 to 6.7% heading into the fall.
Many of the people who bailed on those contracts will flood the rental market while they wait out the Fed-induced storm. That means now is the time to sign a lease for anyone who wants to relocate, but isn’t looking to buy.
“We expect rents to continue to increase nationwide, making this a wise time to relocate for renters,” said Ismael Arjune, principal investor of Tristate Holdings 167 Inc. “Many would-be homebuyers are now sitting on the sidelines because of rising mortgage interest rates and would rather rent now until mortgage rates drop to buy their homes.”
Whatever you do, don’t forget that relocating comes with a litany of expenses that go far beyond the price of the house or the security deposit and monthly rent. In other words, moving is expensive.
“Costs typically range up to 10% with traditional Realtor sale models, including title and escrow fees, moving expenses and commissions,” said Michael Kelczewski, a Realtor and broker with Kurfiss Sotheby’s International Realty. “Renters mostly realize lower moving or transaction costs. However, the longer-term expenses exceed ownership.”
As Kelczewski said, 10% is a fair estimate for those who are selling and buying.
Renters can use a moving expense calculator to work out their specific costs — they’re easy to find online. Those costs include the price of movers, storage, moving supplies, gas, tolls and the list goes on. Distance is one of the biggest factors, as is the size of your place and the amount of stuff you’re hauling from point A to point B.
Each move is unique, but generally speaking, Moving.com estimates that the average move costs between $1,123-$14,107. On the low end is a studio or one-bedroom moving up to 250 miles away. On the high end is a 4-5 bedroom moving more than 2,500 miles away.
More From GOBankingRates