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Esteban Calvo, Kelly Haverstick, and Natalia A. Zhivan

Determinants and Consequences of Moving Decisions for Older Homeowners. Esteban Calvo, Kelly Haverstick, and Natalia A. Zhivan Center for Retirement Research at Boston College 11 th Annual Joint Conference of the Retirement Research Consortium The National Press Club Washington, DC

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Esteban Calvo, Kelly Haverstick, and Natalia A. Zhivan

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  1. Determinants and Consequences of Moving Decisions for Older Homeowners Esteban Calvo, Kelly Haverstick, and Natalia A. Zhivan Center for Retirement Research at Boston College 11th Annual Joint Conference of the Retirement Research Consortium The National Press Club Washington, DC August 11, 2009

  2. The lore on whether older homeowners move is mixed. Percent of the Population 65 and Older, 2000 Average Home Equity by Age, 1992-2004 Sources: U.S. Census Bureau. 2000; and Authors’ calculations from the University of Michigan, Health and Retirement Study (HRS), 1992-2004. 1

  3. The HRS shows that an average of 7% of homeowners move each two-year period. Percentage of Homeowners Moving, by Distance Moved, 1992-2004 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. 2

  4. Over the twelve-year period, 30% of homeowners move at least once. Percentage of Homeowners Ever Moving, 1992-2004 Note: Households are weighted using the 2004 household weights. Source: Authors’ calculations from 1992-2004 HRS. 3

  5. Movers relocate for a variety of reasons. Distribution of Reasons for Migration, 1994-2004 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. 4

  6. Characteristics of movers by reason indicate two types – “planners” and “reactors.” Characteristics of Movers by Reason Given for Moving, 1994-2004 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. 5

  7. So, we pursued the notion of splitting the sample into two groups. Non-movers Non-movers “Shock” “Non-shock” Movers (planners) Movers (reactors) Source: Authors’ illustration. 6

  8. We define a shock as: • death of a spouse; • divorce; • entry into a nursing home; • hospitalization or much worsened health; and/or • loss of a job. 7

  9. Considering the shock and non-shock groups separately, we explore three issues: • determinants affecting the probability of moving; • financial consequences of moving; and • psychological consequences of moving. 8

  10. Demographics similarly affect the probability of moving for each group, with one exception. Effects of Demographic Factors on the Probability of Moving for Older Homeowners, by Shock Status, 1994-2004 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. 9

  11. Not surprisingly, those with a divorce or the death of a spouse are more likely to move. 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. 10

  12. Surprisingly, the impacts of other shocks are not significant. 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. 11

  13. The non-shock movers are less likely to cite family and health reasons. 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. 12

  14. Both types of movers experience large changes in home equity, but in opposite directions. Average Change in Home Equity, by Shock and Move Status, 1994-2004, 2006 Dollars Source: Authors’ calculations from 1994-2004 HRS. 13

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

  16. 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 Statistically significant Not statistically significant Source: Authors’ calculations from 1994-2004 HRS. LIMRA International. 2002. The 2001 Individual Annuity Market: Sales and Assets. Windsor, CT. 15

  17. Conclusion • 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

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