Dr. Michele Morgan migrated last fall from Detroit to Phoenix, taking a job as a psychiatrist. She expected her husband, Sam Kirkland, to soon join her, since he was accepting an early retirement package from his employer, General Motors. But he cannot move, he says, because he has not been able to sell the four-bedroom family home.
Unable to sell his Detroit home, Sam Kirkland has been kept apart from his wife in Phoenix.
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Staying Put
Sam Kirkland expected the home in Detroit owned by him and his wife, Dr. Michele Morgan, a psychiatrist working in Phoenix, to bring $200,000. A similar home nearby sold for $90,000.
“As things now stand,” said Mr. Kirkland, who is 51 and intends to seek work in Phoenix, if he ever gets there, “my wife might decide to give up her job in Phoenix and come back to Detroit for a while, until we can sell the house.”
The rapid decline in housing prices is distorting the normal workings of the American labor market. Mobility opens up job opportunities, allowing workers to go where they are most needed. When housing is not an obstacle, more than five million men and women, nearly 4 percent of the nation’s work force, move annually from one place to another — to a new job after a layoff, or to higher-paying work, or to the next rung in a career, often the goal of a corporate transfer. Or people seek, as in Dr. Morgan’s case, an escape from harsh northern winters.
Now that mobility is increasingly restricted. Unable to sell their homes easily and move on, tens of thousands of people like Mr. Kirkland and Dr. Morgan are making the labor force less flexible just as a weakening economy puts pressure on workers to move to wherever companies are still hiring.
Signaling an incipient recession, nearly 85,000 jobs disappeared in the United States from December through February, and the Bureau of Labor Statistics is expected to announce on Friday that March failed to produce a turnaround in hiring.
“You hear a lot about foreclosure and the thousands of families who are being forced out,” said Joseph S. Tracy, director of research at the Federal Reserve Bank of New York. “But that is swamped by the number of people who want to sell their homes and can’t.”
No government agency counts those who move for a job, either across state lines or just from one town to another in the same state. The Census Bureau, however, calculates how many people move across state lines for all reasons, and that number fell by a startling 27 percent last year, after climbing by almost that percentage for each of the previous three years.
With homes changing hands easily in a booming market, interstate migration reached 2.2 million people in 2006, excluding the effects of Hurricane Katrina. As the economy and home prices began to unravel in 2007, however, interstate migration plunged to 1.6 million people.
“That is still a historically high number,” said Mark Zandi, chief economist at Moody’s Economy.com. “It reflects the relatively strong economy until midyear. But given what’s happening now, I would be surprised if domestic migration isn’t at a record low in 2008.”
Worker mobility — or rather immobility — is making a big contribution to this decline, Mr. Zandi and other economists say. Retirees are similarly stuck in their homes. In normal times, they frequently sell so they can move to condos in Florida or assisted-living facilities or smaller quarters near adult children.
“These older people spent all of their lives earning the money to buy their homes,” said Robert J. Shiller, a Yale economist who is an expert on housing, “and now they resist selling for less than they believe their homes are worth.”
Corporate transfers contribute significantly to worker mobility, and employers often cover at least some of the cost of selling a home in the old location and buying one in the new. That practice can backfire, says Richard Shaw, a vice president of Applied Industrial Technologies, which sells gears, motors, bearings and other industrial parts from 337 centers around the country.
Out of 3,500 employees in the United States, Applied normally transfers 25 to 30 each year from one center to another, or to the headquarters in Cleveland. Almost all are career people rising in the ranks. Despite the opportunity, transfers have fallen by half, Mr. Shaw said. That is mainly because transferred employees too often find themselves owning two homes — one in the old location and one in the new — and paying two mortgages.
Applied tries to minimize the problem by paying one of the two mortgages for up to six months, the expectation being that the old home will sell by then. Increasingly, that does not happen, not with inventories of homes across the country at an 18-year high, according to the National Association of Realtors. That makes employees reluctant to move, even for a raise and a promotion, Mr. Shaw said.
He tells of one transferred executive “who ended up owning two homes for more than six months and, finding himself paying two mortgages, opted to move back to his original city, surrendering his new house to the bank.”
Mr. Kirkland is determined to sell before he moves. But that might take months, he acknowledges. A house that he thought would bring $200,000 — its appraised price three years ago — in fact might bring only $90,000 if he were to sell it today. That was the selling price for a similar 2,500-square-foot home on the next block, and Mr. Kirkland wants more than the $125,000 in debt that he and his wife still have on their house.
“When I stop working at G.M., I am going to devote myself to the house, making it look as pristine as possible,” Mr. Kirkland said.
He is also trying to make a major career transition. After 30 years as a G.M. employee — most recently at a parts warehouse in Pontiac, Mich., serving as a full-time union official of his United Automobile Workers local — he accepted one of the early retirement packages that the company is offering to shrink its work force. Taking courses by mail, he is studying for a master’s degree in organization and development. His goal is to get work in that field in Phoenix, perhaps with a community organization. His wife, who is 47, relocated in October, in time to escape the Michigan winter, and his two daughters are away at college.
But getting to Phoenix is now problematic. He will not leave the house, afraid that if it sits empty, it will be a target for vandals. “I might have to spend so much time living at the house and working on it,” Mr. Kirkland said, “that my wife will say, ‘I can always have a job as a psychiatrist here in Phoenix, but I might have to go back to Detroit for a while.’ ”
Gayle Newton, in a somewhat similar fashion, delayed her departure from Taylorsville, N.C., for two years while she tried to sell her two-bedroom home, on a large parcel of land, for $89,000. She finally gave up, rented the house last September and moved in with her daughter and son-in-law in Baltimore, quickly landing a job there for $15 an hour in the accounts payable department of a granite quarry. Until she left Taylorsville, Ms. Newton, who is 53, did similar work for a furniture company at $9 an hour.
She had put her home on the market in 2006, not long after her husband died and she found herself alone in Taylorsville in a job that did not pay enough to keep her there. She decided to live near her daughter, to find higher-paying work and to apply the proceeds from selling her home toward another one in Baltimore.
“That seemed like a good year, 2006,” Ms. Newton said, “but the downturn in housing had already started in our area. I didn’t realize it. I never imagined that a house on seven acres would not sell. I thought at $89,000 it would be a steal and I could move on to Baltimore much sooner than I did. My daughter finally came and insisted. She could not stand my whining any longer.”
The house in Taylorsville is still unsold.