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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
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