The Great Stay: Why the US housing market is divided in two

I recently gave a talk to a few hundred real estate professionals in Chicago. I started with the map below of the U.S. showing the days on market for pending home sales in different states. It’s a stark illustration that the country is divided into two distinct real estate markets. 

The states with the shortest time to sell a home are crowded in the Midwest and Northeast. Across the Sunbelt, homes are taking roughly twice as long to sell — 50 days in the Midwest compared to 100 days commonly for markets in the South. 

What’s going on?

The short answer is that we used to move from the north to the south, and for the time being we’ve stopped moving. 

I’ve called this phenomenon, “The Great Stay.” In the post-pandemic economy, we’re staying in town, in state, in our jobs, in our homes. Companies are not firing and they’re not hiring. Workers are not quitting. Growing families are not upsizing. Workers are not migrating across the country in search of better opportunities.

Migration disrupted

For many years, Americans have been moving from the North to the South, from the Rust Belt to the Sun Belt. That migration pattern exploded during the pandemic. Remote work, cheap, new housing and other economic opportunities drew millions of people to states like Texas, Florida, Arizona and Colorado. For anyone who had been thinking about making the move, suddenly during the pandemic it was an optimal time to do so. 

Then suddenly the move got expensive. The price of homes in the south shot up. In cities like Tampa, it was quite common to see 45% home price appreciation in just a few years. Mortgages got expensive too. When mortgage rates jumped from 2.8% to 7%, payments rose even further.

But it’s not just the cost of the house. Insurance rates in much of the country spiked with increased natural disasters and rising replacement costs. Taxes jumped. Home goods like washing machines got more expensive. The holding costs of a home in many southern states increased sharply. 

The midwest and northeast aren’t nearly as susceptible to natural disasters and insurance costs have held more steady. As the relative affordability benefit of moving to the South evaporated, we stopped moving. 

A young family in Cleveland used to buy a house from the retirees who moved to Sarasota. Those retirees aren’t selling, but the young family still needs to buy. Inventory is tight in Cleveland and very high in Sarasota as a result. 

Jobs too

The Great Stay is not just a housing story. The weak housing market is intertwined with a very unusual labor market. While the unemployment rate is reasonably low, the hiring rate by companies is as sluggish as it would normally be in a deep recession. The country added only 22,000 jobs in August. 

Because no one is hiring, those who have good jobs don’t want to quit. The rate at which employed workers quit their jobs is remarkably low and looks more like recession than an economy growing at 3%+. Notably the quits rate is lowest in the Northeast, which is also where the days on market, illustrated in our map above, is the lowest. 

Before The Great Stay, I’d be confident to quit my job in Chicago to move to Phoenix and get a new job. Now, they’re not hiring, I’m not quitting and therefore I’m not moving. I’ll stay, thank you very much. 

This weirdly slow jobs market is perhaps the result of big pandemic levels of hiring. Many companies are fully staffed and while layoffs aren’t dominant, hiring is also unnecessary. We’re also in the early stages of AI impact in the economy. While it’s hard to tease out AI-specific impact on hiring in concrete data, anecdotally it sure seems common.

What The Great Stay means for buyers and sellers

The Great Stay means we’re not selling homes in the North and not buying in the South. Inventory and days on market are climbing much more quickly in the South. This north/south divide also shows up in the new construction data. We’ve been building homes in the south much faster than the north. It’s no surprise that inventory piles up where we have all the new construction. 

The Days on Market maps is perhaps the most clear illustration of the phenomenon. The Tampa metro market, for example, is up to 94 days on average for single-family homes, up from just 20 days in September 2021. Condos in Tampa are up to 122 days. 

Home sales in Connecticut, on the other hand, are taking only 48 days on average in September, up from 35 during the pandemic.

The Great Stay is a recent phenomenon. As the housing market emerged from the pandemic boom times, different markets slowed at different paces. I built this animation to illustrate how regional differences got us to this moment now.

When does The Great Stay end?

Real estate moves in cycles, so this period will eventually end. I’ve documented this situation for over a year now, and I expected it to subside a bit in 2025. Instead the dual U.S. market is growing more extreme. When does it change?

The U.S. economy has escaped recession so far. But if we see an acceleration of layoffs and a downturn in the economy, then you’ll see further slowdown in home-buying demand and it’ll impact the country broadly. The map will even out. 

If we’re lucky, interest rates drop a bit in 2026 and that spurs homebuyer demand, which would help housing-related employment and potentially lift the country out of recession on the other side. That renewed growth would signal the migration can resume again. Fingers crossed that it happens sooner rather than later.