Are American homeowners locked into their houses?: the impact of housing market conditions on state-to-state migration
U.S. policymakers are concerned that negative home equity arising from the severe housing market decline may be constraining geographic mobility and consequently serving as a factor in the nation's persistently high unemployment rate. Indeed, the widespread drop in house prices since 2007 has increased the share of homeowners who are underwater on their mortgages. At the same time, migration across states and among homeowners has fallen sharply. Using a logistic regression framework to analyze data from the Internal Revenue Service on state-to-state migration between 2006 and 2009, the authors discover evidence that "house lock" decreases mobility but find it has a negligible impact on the national unemployment rate. A one-standard deviation increase in the share of underwater nonprime households in the origin state reduces the outflow of migrants from the origin to the destination state by 2.9 percent. When aggregated across the United States, this decrease in mobility reduces the national state-to-state migration rate by 0.05 percentage points, resulting in roughly 110,000 to 150,000 fewer individuals migrating across state lines in any given year. Assuming that all of these discouraged migrants were job-seekers who were previously unemployed before relocating and then found a job in their new state would reduce the nation's unemployment rate by at most one-tenth of a percentage point in a given year. The cumulative effect over this period would yield an unemployment rate of 9.0 percent versus 9.3 percent in 2009. Recognizing that not all state-to-state migrants are job-seekers, not all job-seekers were previously unemployed, and not all previously unemployed job-seekers will successfully find work in their new location yields an unemployment rate that is virtually unchanged from the actual one that prevailed from 2006 to 2009.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: 600 Atlantic Avenue, Boston, Massachusetts 02210|
Web page: http://www.bos.frb.org/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ferreira, Fernando & Gyourko, Joseph & Tracy, Joseph, 2010.
"Housing busts and household mobility,"
Journal of Urban Economics,
Elsevier, vol. 68(1), pages 34-45, July.
- Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2008. "Housing busts and household mobility," Staff Reports 350, Federal Reserve Bank of New York.
- Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2008. "Housing Busts and Household Mobility," NBER Working Papers 14310, National Bureau of Economic Research, Inc.
- Alicia Sasser & Bo Zhao & Darcy Rollins & Robert Tannenwald, 2006. "The lack of affordable housing in New England: how big a problem?: why is it growing?: what are we doing about it?," New England Public Policy Center Working Paper 06-1, Federal Reserve Bank of Boston.
- Raven Molloy & Christopher L. Smith & Abigail Wozniak, 2011.
"Internal Migration in the United States,"
Journal of Economic Perspectives,
American Economic Association, vol. 25(3), pages 173-96, Summer.
- 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.
- Raven S. Molloy & Christopher L. Smith & Abigail Wozniak, 2011. "Internal migration in the United States," Finance and Economics Discussion Series 2011-30, Board of Governors of the Federal Reserve System (U.S.).
- Molloy, Raven & Smith, Christopher L. & Wozniak, Abigail, 2011. "Internal Migration in the United States," IZA Discussion Papers 5903, Institute for the Study of Labor (IZA).
- W. A. V. Clark, 1985. "Human Migration," Book Chapters, in: Grant I. Thrall (ed.), Scientific Geography, pages 51 Regional Research Institute, West Virginia University.
- Mueser Peter R. & Graves Philip E., 1995. "Examining the Role of Economic Opportunity and Amenities in Explaining Population Redistribution," Journal of Urban Economics, Elsevier, vol. 37(2), pages 176-200, March.
- Quigley, John M, 1987. "Interest Rate Variations, Mortgage Prepayments and Household Mobility," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 636-43, November.
- 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.
- Christopher L. Foote & Kristopher S. Gerardi & Paul S. Willen, 2008. "Negative equity and foreclosure: theory and evidence," Public Policy Discussion Paper 08-3, Federal Reserve Bank of Boston.
- Sam Schulhofer-Wohl, 2011.
"Negative Equity Does Not Reduce Homeowners' Mobility,"
NBER Working Papers
16701, National Bureau of Economic Research, Inc.
- Schulhofer-Wohl, Sam, 2012. "Negative equity does not reduce homeowners’ mobility," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Feb, pages 1-17.
- Sam Schulhofer-Wohl, 2010. "Negative equity does not reduce homeowners' mobility," Working Papers 682, Federal Reserve Bank of Minneapolis.
- Genesove, David & Mayer, Christopher, 2001.
"Loss Aversion and Seller Behaviour: Evidence from the Housing Market,"
CEPR Discussion Papers
2813, C.E.P.R. Discussion Papers.
- David Genesove & Christopher Mayer, 2001. "Loss Aversion and Seller Behavior: Evidence from the Housing Market," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1233-1260.
- David Genesove & Christopher Mayer, . "Loss Aversion and Seller Behavior: Evidence from the Housing Market," Zell/Lurie Center Working Papers 323, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
- David Genesove & Christopher Mayer, 2001. "Loss Aversion and Seller Behavior: Evidence from the Housing Market," NBER Working Papers 8143, National Bureau of Economic Research, Inc.
- repec:brs:ecchap:12 is not listed on IDEAS
- Jeremy C. Stein, 1995. "Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 379-406.
- John Schmitt & Kris Warner, 2011. "Deconstructing Structural Unemployment," CEPR Reports and Issue Briefs 2011-06, Center for Economic and Policy Research (CEPR).
- Patrick Bajari & Chenghuan Sean Chu & Minjung Park, 2008. "An Empirical Model of Subprime Mortgage Default From 2000 to 2007," NBER Working Papers 14625, National Bureau of Economic Research, Inc.
- Daniel Aaronson & Jonathan Davis, 2011. "How much has house lock affected labor mobility and the unemployment rate?," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Sep.
- Andra C. Ghent & Marianna Kudlyak, 2010. "Recourse and residential mortgage default: theory and evidence from U.S. states," Working Paper 09-10, Federal Reserve Bank of Richmond.
- Greenwood, Michael J. & Hunt, Gary L., 1989. "Jobs versus amenities in the analysis of metropolitan migration," Journal of Urban Economics, Elsevier, vol. 25(1), pages 1-16, January.
- Henley, A, .
"Residential Mobility, Housing Wealth and the Labour Market,"
9615, Department of Economics, University of Wales, Aberystwyth.
- Henley, A, 1996. "Residential Mobility, Housing Wealth and the Labour Market," Working Papers 96-15, University of Wales, Aberystwyth, Department of Economics.
- Larry Long & Kristin Hansen, 1975. "Trends in return migration to the south," Demography, Springer, vol. 12(4), pages 601-614, November.
- Neil Bhutta & Jane K. 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.).
When requesting a correction, please mention this item's handle: RePEc:fip:fedbwp:12-1. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio)
If references are entirely missing, you can add them using this form.