LendingTree’s Jacob Channel on homebuyer migration
Today’s HousingWire Daily features an interview with Jacob Channel, the senior economic analyst at LendingTree. In this episode, Channel examines the company’s latest migration report that highlights the top housing markets for homeowners that have recently moved. Channel also dives into new homebuyer trends and how home prices are impacting demand.
Here is a small preview of the interview, which has been lightly edited for length and clarity:
Alcynna Lloyd: LendingTree’s data indicates that in general, housing markets with a larger share of homeowners who recently moved are now seeing home prices appreciate faster than metros where homeowners tend to stay in their homes longer. The report claims there is a relatively strong positive correlation between the share of homeowners who moved in 2017 or later and three-year home price growth across the nation’s largest metros. Can you dive deeper into this correlation and explain why this is so?
Jacob Channel: Well, the thing about housing prices is that certainly you can appraise how much your house will be worth and while you can make a really educated guess, you don’t necessarily know until it hits the market. A lot of times what people find, especially in housing markets that are as hot as it currently is, when they list their house, it starts to sell for more and more money than they had initially anticipated it being worth. So, the correlation in LendingTree’s data is largely due to the fact that when more people are looking to buy, there’s more competition. And as a result, people are more willing to put forth larger bids on houses and some are willing to spend a little bit more than the asking price. So, you see home prices tend to rise a little bit faster.
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Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:
Alcynna Lloyd: Hello, HousingWire listeners. Today, I’m joined with Jacob Channel, the senior economist analyst at LendingTree. Thanks for joining us, Jacob.
Jacob Channel: Thanks for having me.
Alcynna Lloyd: Listeners, today Jacob will be speaking to us about LendingTree’s latest migration report that highlights the top housing markets for homeowners that have recently moved. Before we dive in, Jacob, can you let our audience get a bit more familiar with you and your work, how did you join the housing finance sector, and what does your work at LendingTree often entail?
Jacob Channel: Yes. So, I’m the senior economic analyst at LendingTree. I kind of sort of lucked into joining kind of housing research. When I was getting my master’s degree in economics, I was looking for a place to intern and I sort of stumbled upon LendingTree where they were grateful to accept me in my really weird cover letter.
So, I ended up working directly under the company’s chief economist where I started researching housing. And here I am today, I’m kind of the senior economic analyst for housing at LendingTree where I write about a pretty wide variety of subjects related to the U.S. housing market.
Alcynna Lloyd: All right, thanks for letting us know a little bit more about you. You’re perfect for today’s topic, which is focusing on a report that came from LendingTree. So, let’s switch gears and focus on today’s main topic, which is the migration trends of recent home buyers. Jacob, in 2020, the COVID-19 pandemic really transformed the housing market and, as a result, some would argue that the 2021 housing market is the hottest it’s ever been. As home buyer demand climbs, we’ve seen all sorts of new home buying trends. My first question for you is what are some of the home buying trends you’ve noticed?
Jacob Channel: Well, I think that what we’ve been seeing is that across the board, really across the entire country, more and more people have decided to buy a house. A lot of that is driven by historically low rates, as well as kind of an increased savings as a result of the COVID-19 pandemic. So, I think the main trend that I’ve noticed is that pretty much anywhere you go in the U.S. people are buying houses.
Alcynna Lloyd: I think that’s an interesting point that you highlighted that savings are why people are moving more than ever now, not only because of low mortgage rates. That brings me to my next question. I’d like to focus on LendingTree’s report. According to the company, to determine where homeowners most recently moved into their new homes, LendingTree analyzed census data to find the share of homeowners in the nation’s 50 largest metropolitan areas who relocated in 2017 or later. The data shows that Las Vegas, Phoenix, and Jacksonville, Florida, are the metros where the largest share of homeowners have most recently moved. Across all three of these metros, an average of 22.5% of homeowners moved in 2017 or later representing almost 6 percentage points higher than the national average of 16.6%. Jacob, why are these housing markets so attractive to home buyers across the country?
Jacob Channel: Well, I think it’s a combination of factors. All of those areas are seeing pretty significant population growth in general, over the past few years. And a lot of that has to do with the fact that their economies are growing, they’re popular destinations for people who are looking to retire in nice warm weather. And then, beyond that, housing prices in those areas were pretty hard hit by the 2007 housing collapse. So, as a result, prices were a little bit lower in places like Las Vegas or like Phoenix than they were in many other parts of the country, which makes the areas a pretty attractive place to move if you’re looking to buy a house and you don’t necessarily wanna spend [inaudible 00:03:27].
Now, of course, with recent home price growth these metros have become more expensive, but nonetheless we are seeing a lot of movement to these areas that will probably continue for a little while longer.
Alcynna Lloyd: It’s great that you brought up home prices because that’s my next question, I wanna focus on housing supply and home prices. LendingTree’s data indicates that, in general, housing markets with a larger share of homeowners who’ve recently moved are now seeing home prices appreciate faster than measures where homeowners tend to stay in their homes longer. The report claims there’s a relatively strong positive correlation between the share of homeowners who moved in 2017 or later and 3-year home price growth across the nation’s largest metros. Can you dive deeper on this correlation, explain why this is so?
Jacob Channel: Well, the thing about housing prices is that certainly you can appraise how much your house will be worth, you can make a really educated guess, but you don’t necessarily know until it hits the market. So, a lot of times what people find, especially in a housing market that is as hot as it currently is, people find that, when they list their house, it starts to sell for more money than they had initially anticipated it being worth.
So, the correlation is largely due to the fact that. when more people are looking to buy, there’s more competition and, as a result, people are more willing to put forth larger bids on houses, they’re more likely to spend a little bit more than the asking price so you see home prices tend to rise a little bit faster.
Alcynna Lloyd: So, to continue on home prices, in the report, LendingTree claims it examined the relationship between how long homeowners have lived in their homes and local home-price growth. Can you tell us a bit more about this relationship and what the data indicates?
Jacob Channel: Yeah. So, when people tend to stay in their houses longer, the houses aren’t hitting the housing market so the prices might not be growing as quickly as if they were on an active market. For example, if you’re living in your house, you might think it’s worth $300,000 and you might say, “Well, it’ll appreciate X% every year. So, maybe in 5 years,” you know, you say, “it’s worth $310,000.” Whereas, if you’re actively moving around or you live in an area where there are lots and lots of people who are actively moving around, because the houses are on the market and their true value can be better, you know, seen, you’ll tend to see housing prices grow a little bit faster. Just because there are more people who are bidding on houses and there are more people who are actually kind of putting money towards housing. Which sort of brings to light the home’s true value.
So, what our data is showing is that typically, you know, where people are staying for the longest, which tend to be more expensive in the first place, you’re seeing a little bit less home-price growth just because there are fewer people in the market actively seeking for houses, actively making bids, and actively kind of buying.
Now, of course, with that being said, that doesn’t necessarily mean that places with fewer homeowners who are recently moving are seeing no home price growth or seeing a low home price growth, especially over the past year with the housing market being as crazy as is. Even areas where people are historically a little bit less inclined to be moving around all the time, really expensive places like San Jose or Los Angeles, you’re still seeing home prices rise really really significantly.
Alcynna Lloyd: Yeah, that’s something we’re definitely hearing from a lot of people is that home prices are just climbing in almost every market, whether it be a small climb or a little climb, it’s definitely happening.
As we talk about home prices, we do have to talk about supply. The most recent housing-market index report from the National Association of Home Builders indicates that in June homebuilder confidence fell to its lowest level since August, 2020, falling 2 points to 81 for newly built single-family homes. The NAHB attributes this to rising material prices and supply chain shortages. My question for you, Jacob, is how’s the nation’s lack of significant housing inventory and supply impacted home-buying migration? I mean, as home prices climb in specific markets, is it deterring the home buyers from relocating to specific markets?
Jacob Channel: Yeah. So, the thing about homebuilder confidence is, though it kind of dipped recently, it’s still higher than it was sort of at the start of the pandemic. And I believe it hit record confidence sometime during the pandemic so I can’t remember the exact number. So while there’s certainly a shortage of homes being built and while that’s definitely deterring people because naturally, the fewer homes there are to buy, the more expensive the few remaining homes are. I don’t think that it’s having necessarily a huge impact. Right now rates are so low and people are so invested in buying housing that they seem to kind of be ignoring some of the traditional things that might keep them from buying like a lack of inventory.
So, definitely, if there are places that are seeing more housing units being built, those places will probably see more removers just because there’s a little bit more supply for people to work with. But even in areas with low supply, we’re still seeing a lot of people moving around and a lot of people buying houses.
Alcynna Lloyd: That is true, although there is a limited amount of supply, we’re still seeing a lot of migration. In your opinion, do you think that home building and housing supply or the lack of housing inventory is going to be a big issue as we move forward in 2021 and 2022?
Jacob Channel: I think it sort of depends. So, what we’re seeing, fortunately, is things like lumber prices starting to come down. We’re seeing more people return to the workforce so more building can commence. We’re also seeing a lot of permits being issued and a lot of general interest among builders in wanting to build.
So, in that respect, if things continue on their current trend, I think that supply issues will sort of get better as more homes are built. That being said, with the coronavirus kind of mutating and with the delta variant becoming the new dominant strain, there is a chance that we could see a sort of another up kick in the virus and, as a result, maybe fewer people will be able to work construction jobs and maybe construction will kind of dip once again.
Alcynna Lloyd: That’s an interesting point. And to build on that I feel like, if we do see the virus itself kick back up, that may also influence more migration trends. As we did see initially with the COVID-19 pandemic, people that were working at home or working remotely saw more of a chance to move to markets that they felt were more desirable. So, interested to see if that’s something we see. Before we wrap today, is there anything else our listeners need to know about the home buying market or LendingTree’s data?
Jacob Channel: I think the big thing that I just think that people should keep in mind is that right now there’s a lot of fear of missing out. A lot of people are seeing their friends, their families, their neighbors buying houses. They hear about how low rates are, they hear about how crazy the housing market is and they think, “Well, I’ve gotta get in on this.” My argument what I think people should realize is that buying a house is a really personal decision. So, just because everyone you know is doing it, your neighbors are doing it, that doesn’t necessarily mean it’s the right choice for you. And you definitely don’t want to take out such a massive financial responsibility if you’re not fully prepared for it.
So, I guess the big thing that I think that everyone should know is that, if you’re in a position to buy a house, now could be a really good time for you. But you shouldn’t feel pressured to buy a house just because it’s the thing that a lot of people are doing right now.
Alcynna Lloyd: That’s really good. I know our home buyers that are listening to this probably really like that now. Personally, I’ve seen so many friends and family buying homes right now. Kind of tempting myself but that little note was really good to hear, so, thank you, Jacob.
Jacob Channel: Yeah, yeah. Just march to the beat of your own drum I think. I think, for the most part, things will work out for you and the other home buyers or would-be home buyers out there.
Alcynna Lloyd: Well, Jacob, thank you so much for joining us today. Listeners, join us back here tomorrow for more HousingWire Daily. Thank you.