Esteban Calvo, Kelly Haverstick, and Natalia A. ZhivanCenter for Retirement Research at Boston College

11th Annual Joint Conference of the Retirement Research ConsortiumThe National Press Club

Washington, DCAugust 11, 2009

Determinants and Consequences of Moving Decisions for Older

Homeowners

The lore on whether older homeowners move is mixed.

1

Sources: U.S. Census Bureau. 2000; and Authors’ calculations from the University of Michigan, Health and Retirement Study (HRS), 1992-2004.

Percent of the Population 65 and Older, 2000

Average Home Equity by Age, 1992-2004

18%

12%

0%

5%

10%

15%

20%

Florida United States0

40

80

120

160

50 54 58 62 66 70 74

Thou

sand

s of 2

006

dolla

rs

The HRS shows that an average of 7% of homeowners move each two-year period.

2

Note: The 1994 measure of migration is not consistent with other years because one variable used to define a move in the 1996-2004 waves was not available in the 1994 wave.Source: Authors’ calculations from 1992-2004 HRS.

Percentage of Homeowners Moving, by Distance Moved, 1992-2004

0%

2%

4%

6%

8%

10%

1994 1996 1998 2000 2002 2004200+ miles 20-200 miles 1-20 miles

Over the twelve-year period, 30% of homeowners move at least once.

3

Note: Households are weighted using the 2004 household weights.Source: Authors’ calculations from 1992-2004 HRS.

Percentage of Homeowners Ever Moving, 1992-2004

30%70%

MoversNon-movers

Movers relocate for a variety of reasons.

4

Note: Households are classified according to the first reason they mention. Numbers do not add to 100 percent because non-respondents are not included.Source: Authors’ calculations from the 1994-2004 HRS.

Distribution of Reasons for Migration, 1994-2004

3.3%

3.9%

15.5%

21.1%

21.7%

28.1%

0% 5% 10% 15% 20% 25% 30%

Health

Retirement

Better Location/House

Other

Financial

Family

Characteristics of movers by reason indicate two types – “planners” and “reactors.”

5

Note: The number of observations does not add to the total number of movers since not all reasons for moving are listed in this table. Households are not weighted since they may be included more than once. Source: Author’ calculations from 1994-2004 HRS.

Characteristics of Movers by Reason Given for Moving, 1994-2004

CharacteristicsPlanners Reactors

Better location/hous

e

Financial Retirement

Family Health

College graduates 0.30 0.22 0.39 0.18 0.21 Married/partnered 0.70 0.63 0.80 0.56 0.60 Good to excellent health status 0.83 0.78 0.87 0.76 0.59 Value of primary residence, past wave (median)

$122,429 $157,465

$154,187 $110,860

$90,159

Non-housing financial wealth, past wave (median)

$24,109 $12,849 $47,066 $8,980 $1,756

Number of observations 392 378 261 515 75

So, we pursued the notion of splitting the sample into two groups.

6

Source: Authors’ illustration.

Movers (reactors)

Movers (planners)

“Shock” “Non-shock”

Non-movers Non-movers

We define a shock as:

7

• death of a spouse;• divorce;• entry into a nursing home;• hospitalization or much worsened health; and/or• loss of a job.

Considering the shock and non-shock groups separately, we explore three issues:

8

• determinants affecting the probability of moving;• financial consequences of moving; and• psychological consequences of moving.

Demographics similarly affect the probability of moving for each group, with one exception.

9

Note: For age, the effect shown is for a change from the 25th percentile to the 75th percentile. All effects are statistically significant at the 10 percent level, except for females in the shock group.Source: Authors’ calculations from 1994-2004 HRS.

Effects of Demographic Factors on the Probability of Moving for Older Homeowners, by Shock Status, 1994-2004

1.1%

2.8%

2.4%

-1.6%

-2.1%

1.6%

2.5%

5.4%

-1.0%

-1.7%

-4% -2% 0% 2% 4% 6%

ShockNon-shock

Not married

College degree

White

Female

Age

Not surprisingly, those with a divorce or the death of a spouse are more likely to move.

10

Effects of the Type of Shock on the Probability of Moving for Older Homeowners with Shocks, 1994-2004

Note: Effects are statistically significant at the 10 percent level.Source: Authors’ calculations from 1994-2004 HRS.

9%

42%

0%

10%

20%

30%

40%

50%

Newly widowed Newly divorced

Surprisingly, the impacts of other shocks are not significant.

11

Effects of the Type of Shock on the Probability of Moving for Older Homeowners with Shocks, 1994-2004

Note: Effects are not statistically significant at a 10 percent level.Source: Authors’ calculations from 1994-2004 HRS.

0.2%0.5%

-1.1%

-2%

-1%

0%

1%

Job loss Health shock Nursing home

The non-shock movers are less likely to cite family and health reasons.

12

Reasons Provided for Moving by Older Homeowners, by Shock Status, 1994-2004

Note: The categories within each group do not add to 100 percent due to movers that provided no reason.Source: Authors’ calculations from 1994-2004 HRS.

22%

15%

31%

2%

15%

6%

26%21%

16%

26%

0%

10%

20%

30%

40%

Betterlocation/house

Financial Retirement Family Health

Shock Non-shock

Both types of movers experience large changes in home equity, but in opposite directions.

13

Source: Authors’ calculations from 1994-2004 HRS.

Average Change in Home Equity, by Shock and Move Status, 1994-2004, 2006 Dollars

-$25,704

$12,111 $12,182

$32,771

-$40,000

-$20,000

$0

$20,000

$40,000

Shock Non-shock

Mover Non-mover

LIMRA International. 2002. The 2001 Individual Annuity Market: Sales and Assets. Windsor, CT. 14

Moving makes both the non-shock and shock homeowners feel better.

Average Change in Psychological Well-Being, by Shock Status, by Move Status, 1994-2004

Source: Authors’ calculations from 1994-2004 HRS.

-0.04

0.10

-0.12

0.01

-0.15

-0.10

-0.05

0.00

0.05

0.10

0.15

Shock Non-shock

Movers Non-movers

0.0

-0.1

-0.4

-1.2

-1.5

0.1

-2 -1.5 -1 -0.5 0 0.5

Newly widowed

Health

Newly divorced

Nursing home

Job loss

Move

LIMRA International. 2002. The 2001 Individual Annuity Market: Sales and Assets. Windsor, CT.

15

But for the shock households, it’s the shock – not the move – that has the biggest impact.

Effects on the Change in Psychological Well-Being, 1994-2004

Source: Authors’ calculations from 1994-2004 HRS.

Statistically significantNot statistically significant

•Older homeowners do move, but most moves are not to Florida.

•Moves fall into two categories: those that are planned and those that are reactive.

•Divorce and widowhood are major motivations for moving.

•Shock and non-shock movers experience large changes in home equity – one negative and one positive.

•Moving makes all homeowners feel better but, for shock homeowners, shocks have the largest impact on well-being.

LIMRA International. 2002. The 2001 Individual Annuity Market: Sales and Assets. Windsor, CT.16

Conclusion