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People are spending more time at home than ever due to the pandemic—and many are rethinking where they want to live as a result. Whether you're dreaming of an at-home office, playroom, yard space or lower month bills, relocating could be a good option.
About 1 in 5 adults either moved or know someone who moved due to the COVID-19 pandemic, according to a Pew Research Center study from June 2020. However, a MyMove analysis of USPS data found that while there was a 27% increase in temporary address changes from February to July 2020 compared with 2019, there was just a 2% increase in permanent address changes. This indicates more people might be doing things like staying in a vacation home, and not necessarily picking up and leaving town for good.
If you're interested in making a permanent move, here's what you'll want to think about.
When Is Relocating a Good Idea?
Your household's circumstances will play a big role in determining if relocating is a good idea. After all, making a big move is a much simpler prospect for a single person who rents versus a homeowner with a large family. However, there are good reasons for relocating that can apply no matter your situation:
- You can save money. Moving might lead to savings on rent, property taxes, utilities or travel costs. Even if your housing expenses stay the same, relocating to an area with a lower cost of living could lead to significant savings. But be careful about breaking a lease if you're currently renting, as that might cost you.
- You're looking for work. Working from home isn't possible for many jobs, and some areas may offer more (or more lucrative) opportunities.
- You want to be closer to family. Having family nearby could be important to you during the pandemic and beyond, particularly when there are small children in the family and you can offer or need additional support.
- You want to upsize or downsize. Perhaps you're looking for an extra room you can use as a home office, a large outdoor space or a smaller home that's easier to maintain.
The Pew Research Study found that during the first half of the year, popular reasons for moving included: to reduce their risk of getting COVID-19 (28%), due to closing college campuses (23%), to be with family (20%) or for financial reasons (18%).
How Much Will Moving Cost?
Moving costs can vary depending on several variables, such as how much stuff you have, how far you're moving, and whether you're hiring movers.
If you're moving within a few hours' drive and have a small home, you might be able to hire two movers and have everything done for $500 or less. There could be extra costs to consider, however, such as packing services and insurance. You can also save money by renting a truck and moving everything on your own, if that's a practical option.
The moving costs associated with an out-of-state or cross-country move can add up to several thousand dollars. But again, the DIY approach will lead to significant savings.
In addition to paying for the move itself, you'll need to budget for the associated expenses. These may include travel costs and temporary lodging and storage if you're not ready to move right into your new home right away (due to remodeling, for instance).
You may also need to have cash on hand for a security deposit and the first month's rent. Or, when buying a home, for your down payment and closing costs. If you have poor credit, you could also have to pay a security deposit to open new utility, cable and internet accounts.
How Relocating Can Affect Your Finances and Credit
Whether or not you're moving primarily for financial reasons, consider how the move could impact your overall financial situation beyond the upfront expenses.
The cost of living and average wages in the new area will be two of the most important factors—try to estimate how much you can expect to earn and how much your monthly expenses might change. If you plan on keeping the same job and working remotely, know that companies may make cost-of-living adjustments, which could lead to a pay cut if you move to a less-expensive area.
Moving won't directly impact your credit scores, which don't consider your location or income. However, moving could indirectly impact your credit if you forget to make final utility or telecom payments after moving, for example. Or, you may forget to return a cable box or modem, leading to a charge that goes unpaid.
While making the utility and telecom payments won't generally help your credit—unless you use a tool like Experian Boost®ø—missing payments could hurt your credit if your account is sent to collections.
To avoid this, make sure you update your contact information and mailing address with all your creditors to ensure you'll get notifications for final bills.
What About Housing: Should You Rent or Buy?
In addition to deciding where you want to relocate to, you'll have to choose between renting and buying. If both options are available to you, there won't necessarily be a clear answer to which is best.
In terms of pure financials, you could use an online rent or buy calculator to see which may be the better option. Generally, if you won't live in the same place for more than a few years, renting may be more cost-effective because buying a home leads to nonrefundable upfront closing costs.
But there are many things that'll factor into the decision, such as if your credit is ready for a mortgage. Some people also prefer the flexibility that comes with renting, and prefer not having to be responsible for upkeep and repairs.
If you are looking to buy, know that an unexpected impact of the pandemic has been rising home prices due to high demand, low mortgage rates and limited housing availability. This may be especially true in and around major cities. The National Association of Realtors reported that during the third quarter of 2020, single-family home prices increased from last year in all 181 metro areas that the organization tracks—and 117 metro areas had double-digit percentage increases.
Get Your Credit Ready for a Move
Whether you're planning on renting or buying, having good credit can make the process easier and less expensive. You can monitor your credit for free with Experian, and get an updated FICO® Score☉ when you sign in to your account. Be sure to review your credit report for errors, which you can dispute online, and learn how to improve your credit over time.