The "Great Stay" is Freezing the Housing Market More Than Rates

Min 1:

The housing market's biggest problem isn't mortgage rates anymore—it's job insecurity.

Compass Chief Economist Mike Simonsen calls it "The Great Stay," where homeowners hold onto both their jobs and houses because they lack confidence about finding employment elsewhere.

Unemployment remains low, but hiring slowed to levels typically seen during recessions—even though the economy avoided a formal downturn.

That dynamic creates a frozen market where people want to move but won't take the risk.

"If I have a job I don't want to leave, and I have a mortgage I don't want to leave, even though I'd like to move to Phoenix or Denver, I'm worried about getting a job," Simonsen explained in his February 2026 housing outlook webinar.

This reframes the entire inventory conversation. Tight supply in many markets isn't just homeowners clinging to 3% mortgages—it's stalled labor mobility.

People aren't moving because they're scared to change jobs in an uncertain hiring environment.

Min 2:

The numbers tell the story of two different Americas.

The Midwest and Northeast show strong price growth—New Jersey up 5.5%, Illinois up 5.4%, Nebraska up 5.4%, Connecticut up 5.1% according to Cotality data for early 2026.

Meanwhile, the South and West are cooling hard. Florida down 2.36%, Texas down 1.09%, Colorado down 1.31%, Hawaii and Utah both down 1.11%.

These Sun Belt markets that absorbed massive pandemic migration are working through elevated inventory as inbound moves slow dramatically.

National home price growth slowed to just 0.74% year-over-year in January 2026—down from 3.43% at the start of 2025.

That's one of the softest rates since the post-Great Recession recovery, signaling definitive rebalancing.

If you're living in the Midwest or Northeast, your home probably gained value. If you're in Florida or Texas, it likely lost ground.

The housing market split regionally based on where migration patterns shifted—or stopped entirely.

Min 3:

Compare today's frozen mobility to normal migration patterns and the difference is stark. Americans are moving far less than usual since 2022.

This period reshaped migration patterns and housing inventory nationwide as buyers and sellers delayed plans.

Tight Midwestern markets reflect stalled outbound migration. People who would've left for warmer climates are staying put.

That creates inventory shortages and renewed price pressure in markets that didn't experience pandemic boom-and-bust cycles.

Sun Belt markets face the opposite problem. Years of migration and new construction created elevated inventory that takes time to absorb.

When inbound migration slows but construction continues, inventory piles up and prices fall.

Buy in the Midwest or Northeast today and you're acquiring properties in markets with strong fundamentals—job diversity, relative affordability, and tight inventory from frozen outbound migration.

Appreciation continues while Sun Belt markets correct.

Min 4:

Individual homeowners face harder decisions than investors when job insecurity freezes markets.

You can't easily relocate rental properties, but you also don't face personal employment uncertainty. Your investment decisions separate from your job situation.

Simonsen's base case for 2026 projects roughly 5% sales growth and flat to slightly positive home prices nationally.

That's measured, not explosive—reflecting a market finding balance after years of extremes.

Small investors should focus on markets where migration stabilized rather than reversed. The Midwest and Northeast offer opportunities Sun Belt investors miss.

When everyone chased Florida and Texas during pandemic, they overlooked Chicago, Newark, and Hartford—now the strongest performers.

The risk is that if hiring confidence returns, the Great Stay ends quickly.

Pent-up mobility could flood the market with inventory as homeowners who delayed moves for years finally pull the trigger. That inventory surge would pressure prices in receiving markets.

Min 5:

Anyone looking to invest should prioritize markets where local employment drives housing—not speculative migration.

The Midwest thrives on diversified job markets and hybrid work dynamics, not hopes that everyone moves from California.

With 69 of the largest 100 metros currently overvalued according to Cotality, selectivity matters more than ever.

Overvalued means current prices exceed long-term values by more than 10%. Those markets face correction risk if fundamentals weaken.

Small investors building portfolios can capitalize on the Great Stay by targeting rental properties in tight Midwestern markets.

When homeowners won't move, they rent locally instead. Demand for quality rentals stays strong even as overall transaction volume stagnates.

Cotality forecasts home prices rising 4.43% by January 2027—modest but positive.

Markets like Los Angeles, New York City, San Francisco, and Honolulu could see rebounds in 2027 after corrections. Timing matters for value investors buying dips.

Takeaway:

The "Great Stay" is freezing housing markets as job insecurity—not mortgage rates—keeps homeowners stuck.

Hiring slowed to recession-like levels even though unemployment remains low, creating frozen labor mobility that stalls housing transactions.

National home price growth hit just 0.74% year-over-year in January 2026—down from 3.43% a year earlier.

The Midwest and Northeast lead with New Jersey up 5.5% while the South and West cool with Florida down 2.36% and Texas down 1.09%.

Individual investors win by targeting Midwest and Northeast markets where stalled outbound migration creates tight inventory and steady appreciation.

Sun Belt markets face elevated inventory from years of construction meeting slowing inbound migration.

69 of the largest 100 metros are overvalued by more than 10% above long-term fundamentals according to Cotality.

Selectivity matters—buying in markets with strong local employment and diversified economies beats chasing speculative migration trends.

Move now to acquire rental properties in tight Midwestern markets where frozen mobility creates sustained rental demand. Focus on cities like Chicago, Newark, and Hartford showing price growth while Sun Belt markets correct.

Wait for hiring confidence to return before expecting transaction volumes to meaningfully increase—the Great Stay won't end until workers feel secure changing jobs.