Texas Border Business
We tend to label trends in society and the economy in order to simplify complex issues, with the latest example being the “Great Stay.” The name is something of a riff on the Great Resignation, Great Recession, Great Depression, and other great and not-so-great patterns which have been similarly proclaimed. The Great Stay refers to the reduced mobility we are observing at present. There are two major components which are coming together to create this phenomenon.
One factor is the declining rate of job openings and “quits” across the economy (which is when an employee voluntarily leaves a job, typically for a better one). The Bureau of Labor Statistics tracks these variables, and currently both are falling. As the economy surged after the pandemic, the number of job openings reached as high as 12.2 million (March 2022), with rampant labor shortages and rapid hiring across the spectrum. The number of quits also peaked, reaching 4.5 million in April of that year.
Job openings are currently fewer than eight million, with just over three million quits, about the level prior to the pandemic (though quits are somewhat lower). Other signals have pointed to softening in the labor market, which is not shocking given the actions the Federal Reserve has taken to slow inflation. However, it suggests that workers have fewer opportunities to level up their jobs by quitting for better offers; thus, they’re staying.
The other major factor is that many homeowners are unable or unwilling to move due to the much higher costs they face in the current environment. The price of housing has rapidly escalated across most areas of the country (though down some from recent record highs), as have property taxes and insurance. Additionally, people who locked in mortgages from the fall of 2020 through 2021 are paying interest rates of 3% or less, whereas 30-year fixed mortgages are now averaging close to 7%. For a median-priced new home, that’s about $1,000 per month. It’s little wonder that many are choosing to remain where they are.
Hence, the Great Stay, with existing home sales in 2024 lower than they have been since 1995. Worse, it’s the second year in the row they’ve been extremely low. It’s just too expensive for many people to move, particularly since the job market has softened. It’s more a reflection of the interest rate environment than any underlying weakness in the economy, but the Great Stay is clearly putting a great crimp in the sale of existing homes.
Basically, people are remaining in their jobs and their homes. The economy is largely built around people doing something. When they don’t, generating substantial growth becomes more difficult. Speaking of staying – stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
