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The effects of negative house price changes on migration: Evidence across U.S. housing downturns

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  • Foote, Andrew

Abstract

I estimate the extent to which negative house price changes lower mobility for some homeowners. My identification strategy employs a reduced-form model that uses variation in state-year house price changes, as well as variation in a homeowner's exposure to house price changes, based on pre-existing leverage. I find that house price declines cause migration to decrease for homeowners that have low equity, but that there is no effect for the most leveraged homeowners. Differences in default costs across states do not appear to affect the mobility of homeowners in negative equity. Housing lock-in effects are larger in the most recent recession, affecting both in-state and interstate migration.

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  • Foote, Andrew, 2016. "The effects of negative house price changes on migration: Evidence across U.S. housing downturns," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 292-299.
    • Handle: RePEc:eee:regeco:v:60:y:2016:i:c:p:292-299
    DOI: 10.1016/j.regsciurbeco.2016.08.001
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    2. Gaetano Basso & Francesco D’Amuri & Giovanni Peri, 2019. "Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 528-572, September.
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    4. Alm, James & Enami, Ali, 2017. "Do government subsidies to low-income individuals affect interstate migration? Evidence from the Massachusetts Health Care Reform," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 119-131.
    5. Ning Jia & Raven Molloy & Christopher Smith & Abigail Wozniak, 2023. "The Economics of Internal Migration: Advances and Policy Questions," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 144-180, March.
    6. Lina Meng & Xiao Xiao & Yinggang Zhou, 2023. "Housing Boom and Household Migration Decision: New Evidence from China," The Journal of Real Estate Finance and Economics, Springer, vol. 67(3), pages 453-479, October.
    7. Michael Amior & Alan Manning, 2018. "The Persistence of Local Joblessness," American Economic Review, American Economic Association, vol. 108(7), pages 1942-1970, July.
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    11. Niu, Dongxiao & Sun, Weizeng & Zheng, Siqi, 2021. "The role of informal housing in lowering China’s urbanization costs," Regional Science and Urban Economics, Elsevier, vol. 91(C).

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    Keywords

    Mobility; Housing; House-Lock;
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