According to NAHB’s latest special study, households who recently changed addresses fall into a natural order: 1) Buyers of Newer Homes, 2) Buyers of Older Homes, 3) Renters of Newer Homes, and 4) Renters of Older Homes,
As you move up the scale from 4 to 1, the following interrelated tendencies become evident: The movers have, on average, higher incomes. More of the movers are previous home owners. Fewer are newly formed households (moving out of homes owned or rented by someone else). More are moving up in terms of subjectively measured housing quality. More are also moving up in terms of housing costs.
For example, as the chart below shows, the average income of the recent movers declines systematically from $123,000 for group 1 to $49,000 for group 4.
NAHB’s new study is based on data from the 2015 American Housing Survey (funded by HUD and conducted by the U.S. Census Bureau), and analyzes the 29.8 million households who moved into their present homes in the two-year period before the 2015 survey was conducted. Newer homes are defined as built in 2010 or later, the most recent cut-off point available in the survey data.
Home buyers and new tenants in rental housing can come from households that were previously owners, households that were previously renters, and newly formed households. Former home owners account for a significantly larger share of home buyers than of new tenants in rental housing. In other words, a large share of home buyers consists of repeat buyers. Former renters and new households account for larger shares of the home buying market for older homes, still larger shares of the market for newer rental housing, and shares even larger than that of the market for older rental housing.
Despite these differences, the four categories of recent movers are similar in some respects. All are either acquiring better housing without always paying more for it, or (for renters of older homes) achieving lower housing costs without always sacrificing quality. In addition, all four types of movers most often move relatively short distances (from less than 50 miles away) but without staying in the same neighborhood.
For more on the similarities and differences among home buyers and renters, please consult the full study.