By A recent study conducted by researchers at the University of British Columbia revealed that the surge in home prices during the pandemic has influenced millions of Americans, particularly older workers, to leave their jobs. The study shows a correlation between the increase in housing prices and the decline in labor force participation, as more homeowners in their 50s, 60s, and 70s were able to retire early.
According to the report, “High house prices allowed many older Americans to retire early; if not for the high house prices, their labor force participation in 2021 would have been similar to 2019.”
This phenomenon has contributed to what is now being called “the Great Resignation,” as millions of Americans have opted to switch jobs or leave the workforce altogether. The rate of job quits in the U.S. hit a record high in July last year, according to the Bureau of Labor Statistics.
The BLS attributes the sharp rise in quitting to “labor-market tightness,” worker concerns about COVID-19, and challenges caused by pandemic-related closures of childcare centers and schools. However, it is clear that the pandemic housing boom has also played a key role in this trend.
As the pandemic continues to shape the economy and workers’ priorities, it remains to be seen how long this trend will last and what its long-term impact will be on the job market and the economy.
Exploring the Reasons Behind the Great Resignation
The Great Resignation has been making headlines over the course of the pandemic, with employees leaving their jobs in droves. While some attribute this trend to low pay or a lack of opportunities for growth, a recent study from the University of British Columbia suggests that another factor may be driving people out of the workforce.
According to the study, homeowners — particularly those who are older — are quitting their jobs because they can tap into the value of their homes. With property values soaring during the pandemic, many homeowners have seen their homes appreciate in value significantly.
For people aged 65 — typically considered the age of retirement — the effect is even more pronounced. Rising home values can make it more tempting for these individuals to step away from the workforce and leverage their home equity instead.
The Great Resignation may have multiple drivers, with some individuals leaving work due to dissatisfaction with their current employment situation. However, this study suggests that financial factors may also be contributing to this trend. As more and more people see their homes appreciate in value, we may continue seeing increased rates of voluntary retirement across age groups.
The Impact of Rising Home Prices on Older Homeowners
Rising home prices have led many older homeowners to quit their jobs, according to a recent report. The increase in home values has given people the ability to access cash through home-equity loans or reverse mortgages, and downsizing has resulted in sizable nest eggs for some.
In addition to low mortgage rates and remote work opportunities during the pandemic, many homeowners refinanced their homes to save on monthly bills. However, this has created a post-pandemic disincentive to sell as many are reluctant to give up their low rates for a 30-year mortgage with rates nearly at 7%.
This lack of desire to sell has created an issue of low inventory, limiting home sales. According to the National Association of Realtors, inventory is at multi-decade lows.
Despite The Big Quit trend among many workers near retirement, Favilukis doesn’t expect this to continue. People may not view their homes as giant ATM machines, resulting in them staying in the labor market for longer.
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