Paying People to Move Won’t Thaw the Housing Freeze

Cheap mortgages have become an expensive reason to stay put. An owner who would give up a low fixed rate by selling^[1] can afford the current house and still balk at financing the next one. When a household cannot trade up and an empty nester has nowhere to downsize, the housing market freezes around them. A renter hoping to buy is left waiting for an opening. I would loosen zoning so more homes can be built, not have the government pay people to compete for the homes already there.

Consider two hypothetical $300,000 mortgages, each amortized over a fresh 30-year term. At 3%, principal and interest come to about $1,265 a month. At 6.58%, Freddie Mac’s^[2] 30-year fixed-rate average on August 14, they come to about $1,912: roughly $7,800 more a year. The higher payment buys no extra space. Taxes and insurance come on top; a real move can also change the loan balance and term and add transaction costs. The benchmark covers conventional, conforming purchase loans with 20% down and excellent credit. A first-time buyer has no old rate to keep.

By loan count, Federal Housing Finance Agency^[3] data released June 27 show that 37% of outstanding mortgages had origination rates below 4% at the end of 2019. That share reached 65% in early 2022, when nearly one loan in four began below 3%. At the end of March 2025, it was still 53%, with about one loan in five below 3%. The figures include adjustable-rate loans and record origination rates, so they do not describe every borrower’s current payment terms.

Outstanding mortgages by interest rate, 2013 to 2025

In a 2024 FHFA working paper, revised that August,^[1] Ross Batzer and coauthors estimate that lock-in reduced sales of homes with fixed-rate mortgages by 45% in the second quarter of 2024, compared with their estimate of sales without lock-in. They find evidence that lost transactions are mostly forgone rather than postponed. The stock of houses can remain unchanged while the match between houses and households gets worse. Consider one possible chain: a smaller nearby home lets an empty nester sell to a household seeking another bedroom, which can release a starter home for a renter. If the first move has nowhere to land, later moves may never happen.

The Census Bureau’s^[6] historical Current Population Survey series puts the annual mover rate at 20.2% in 1948, 9.8% in 2019 and 7.8% in 2023, its lowest published observation. More than four-fifths of that decline had already occurred by 2019. The measure covers noninstitutionalized U.S. residents age 1 and older living at a different address from a year earlier, including renters, owners and moves across town. Survey breaks, gaps and pandemic collection problems limit precise comparisons across the decades.

Share of Americans who moved in the past year, 1948 to 2023

The strongest case for leaving low-rate owners alone is that staying put can reflect success. Greg Kaplan and Sam Schulhofer-Wohl,^[7] studying interstate migration from 1991 to 2011, argue that occupational earnings became less tied to particular places while people could learn about destinations without moving there. Fewer moves can mean better-informed choices. And a fixed-rate mortgage keeps its interest rate^[8] when market rates rise. Taking away that protection would expose existing borrowers to a risk they had avoided. That would be a peculiar definition of progress. Owners owe nobody a sale. The country does not need more moving vans merely to improve a statistic.

But choosing to stay is different from being priced out of a destination. In Peter Ganong and Daniel Shoag’s 2017 study,^[9] janitors in New York, New Jersey and Connecticut earned 28% more in 2010 than those in Alabama, Arkansas, Georgia, Mississippi and South Carolina. Subtract housing costs, as the authors do, and that becomes 7% less. Their accounting uses annual rent or 5% of a home’s value as housing costs. This is a regional comparison, not a forecast for an individual mover. Chang-Tai Hsieh and Enrico Moretti^[10] argue that restrictions on new housing limit how many workers can reach productive cities. An unaffordable home can turn higher wages into a theoretical opportunity.

The tempting fix is to pay people to move. A worker with a better job offer may need a deposit and the first month’s rent now, long before rezoning produces a finished apartment. A grant could bridge that genuine cash shortage. I would still reject a government stipend. Rejecting it means accepting that some worthwhile moves will remain unaffordable in the meantime. But a payment for changing addresses does not itself create another address. Where construction remains constrained, it risks financing a higher bid for existing housing while leaving the underlying shortage in place. An employer that would otherwise pay relocation costs would also have less reason to do so if taxpayers covered the bill.

Construction gives the chain another starting point. Evan Mast’s^[11] research on residential address chains combines address histories with simulations to estimate that 100 new market-rate units would prompt 45 to 70 people to leave below-median-income census tracts, with almost all the modeled effect occurring within five years. The chain reaches beyond the new buildings’ first occupants. For a downsizer, a sufficiently cheaper home could reduce borrowing enough to make a move worthwhile despite a higher rate. For a renter, an additional apartment creates an option without waiting for an existing owner to sell. We should not require every solution to begin with somebody surrendering a cheap mortgage.

Where zoning reserves a lot for one house, city councils and state legislatures should allow duplexes, backyard cottages and small apartment buildings. They should remove minimum-lot and parking requirements that defeat that permission. That can mean taller buildings, more neighbors and more competition for curb space. Construction will not erase old rate penalties or produce homes overnight. But it can make room for the smaller home, the extra bedroom and the apartment near work before we invent a public allowance for their scarcity. Otherwise, the sensible instruction to go where the opportunities are comes with an absurd condition: first, find a place you can afford to leave.