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Household mobility over the Great Recession: evidence from the U.S. 2007-09 Survey of Consumer Finances panel

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  • Brian K. Bucks
  • Jesse Bricker
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    Abstract

    This paper uses data from the 2007-09 Survey of Consumer Finances panel to examine U.S. households' decisions to move and the role of negative home equity and economic shocks, such as job loss, in these decisions. Even over this period of steep house price declines and sharp recession, we find that most moves were prompted by standard reasons. The recession's effects are nonetheless apparent in the notable fraction of homeowners who moved involuntarily due to, for example, foreclosure. Many involuntary moves appear to stem a combination of negative home equity and adverse economic shocks rather than negative equity alone. Homeowners with both negative equity and economic shocks were substantially more likely to have moved between 2007 and 2009 and to have moved involuntarily. The findings suggest that, analogous to the double-trigger theory of default, the relationship between negative equity and household mobility varies with households' exposure to adverse shocks.

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    Bibliographic Info

    Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2013-53.

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    Date of creation: 2013
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    Handle: RePEc:fip:fedgfe:2013-53

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    1. Horrace, William C. & Oaxaca, Ronald L., 2006. "Results on the bias and inconsistency of ordinary least squares for the linear probability model," Economics Letters, Elsevier, vol. 90(3), pages 321-327, March.
    2. Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2011. "Housing Busts and Household Mobility: An Update," NBER Working Papers 17405, National Bureau of Economic Research, Inc.
    3. Bucks, Brian & Pence, Karen, 2008. "Do borrowers know their mortgage terms?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 218-233, September.
    4. Sam Schulhofer-Wohl, 2011. "Negative Equity Does Not Reduce Homeowners' Mobility," NBER Working Papers 16701, National Bureau of Economic Research, Inc.
    5. David Genesove & Christopher Mayer, 2001. "Loss Aversion And Seller Behavior: Evidence From The Housing Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1233-1260, November.
    6. Chan, Sewin, 2001. "Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?," Journal of Urban Economics, Elsevier, vol. 49(3), pages 567-586, May.
    7. Raven Molloy & Christopher L. Smith & Abigail K. Wozniak, 2011. "Internal Migration in the United States," NBER Working Papers 17307, National Bureau of Economic Research, Inc.
    8. Jesse Bricker & Brian Bucks & Arthur Kennickell & Traci Mach & Kevin Moore, 2011. "Surveying the aftermath of the storm: changes in family finances from 2007 to 2009," Finance and Economics Discussion Series 2011-17, Board of Governors of the Federal Reserve System (U.S.).
    9. Engelhardt, Gary V., 2003. "Nominal loss aversion, housing equity constraints, and household mobility: evidence from the United States," Journal of Urban Economics, Elsevier, vol. 53(1), pages 171-195, January.
    10. Neil Bhutta & Jane Dokko & Hui Shan, 2010. "The depth of negative equity and mortgage default decisions," Finance and Economics Discussion Series 2010-35, Board of Governors of the Federal Reserve System (U.S.).
    11. Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2008. "Housing Busts and Household Mobility," NBER Working Papers 14310, National Bureau of Economic Research, Inc.
    12. Foote, Christopher L. & Gerardi, Kristopher & Willen, Paul S., 2008. "Negative equity and foreclosure: Theory and evidence," Journal of Urban Economics, Elsevier, vol. 64(2), pages 234-245, September.
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