Active Duty Homeowners on PCS Orders Face Quandary

THE BIG STORY

A Rock and a Hard Place

Every year, hundreds of thousands of service members come down on PCS orders. Those who own homes are in a difficult spot.

Each year, about 400,000 troops of the 1.4 million serving on active duty in the U.S. military have to move. The formal term for this is PCS, or “Permanent Change of Station,” and it could mean moving across the state, or moving across the world. The real estate market has put troops who own homes — especially those with families — in a bind.

Why is that? While it’s a pretty good time to sell one’s home, it’s a very bad time to buy. Limited housing stock is only part of the problem. In 2023, the interest rate on a new 30-year fixed rate mortgage was 3.22% in January — by the end of the year, that rate had climbed to 7.76%.

Most orders are for 2-3 years, which means that families who bought homes two or three years ago and who benefitted from extremely low interest rates (in the region of 3% or less) at the time now face the prospect of buying homes taking out 30 year fixed-rate mortgages at or near 7% (the rate has fallen somewhat off that blistering high of November 2023).

A peculiarity of Active Duty is that when orders come down, one has weeks to settle one’s affairs, securing housing at the new station while wrapping up one’s living situation at the old post. There are organizations that can help with this, with platforms such as Military One Source offering advice, knowledge, and resources. Bases often have people on staff at the post level who can provide guidance or assistance. And a new unit often has some capacity to assist with new members moving in.

These local partners can provide proverbial tactical assistance — when it comes to larger trends, such as financial winds affecting inflation, interest rates, and (ultimately) the cost of a mortgage, military families who own homes can find themselves in a jam through no fault of their own. The housing system in the U.S. encourages families to build equity through a home, both in terms of how home sales are taxed, and how properties are evaluated. The system works best when people can move opportunistically or when necessary — not when compelled.

In the military, now, there’s an unusual situation due to the U.S. housing market: likely thousands of military families forced to undergo financial hardship for reasons beyond their control. While there are benefits that help offset the cost of moving for service members, such as the military’s no-cost (sometimes, you get what you pay for) moving service, the fact of moving — its imperative — is, at this precise moment, a great inconvenience for many.

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