Housing busts and household mobility: an update
This paper provides updated estimates of the impact of three financial frictions—negative equity, mortgage lock-in, and property tax lock-in—on household mobility. We add the 2009 wave of the American Housing Survey (AHS) to our sample and also create an improved measure of permanent moves in response to Schulhofer-Wohl’s (2011) critique of our earlier work (2010). Our updated estimates corroborate our previous results: Negative equity reduces household mobility by 30 percent, and $1,000 of additional mortgage or property tax costs reduces household mobility by 10 to 16 percent. Schulhofer-Wohl’s finding of a slight positive correlation between mobility and negative equity appears due to a large fraction of false positives, as his coding methodology has the propensity to misclassify almost half of the additional moves it identifies relative to our measure of permanent moves. This also makes his mobility measure dynamically inconsistent, as many transitions originally classified as a move are reclassified as a nonmove when additional AHS panels become available. We conclude with directions for future research, including potential improvements to measures of household mobility.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.newyorkfed.org/
More information through EDIRC
|Order Information:|| Web: http://www.ny.frb.org/rmaghome/staff_rp/ 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.:
- Sam Schulhofer-Wohl, 2010.
"Negative equity does not reduce homeowners' mobility,"
682, Federal Reserve Bank of Minneapolis.
- 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, 2011. "Negative Equity Does Not Reduce Homeowners' Mobility," NBER Working Papers 16701, National Bureau of Economic Research, Inc.
- Quigley, John M., 2006. "Urban Economics," Berkeley Program on Housing and Urban Policy, Working Paper Series qt0jr0p2tk, Berkeley Program on Housing and Urban Policy.
- Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007.
"A Unified Framework for Measuring Preferences for Schools and Neighborhoods,"
07-27, Center for Economic Studies, U.S. Census Bureau.
- Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, 08.
- Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," NBER Working Papers 13236, 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.
- Ashenfelter, Orley & Krueger, Alan B, 1994.
"Estimates of the Economic Returns to Schooling from a New Sample of Twins,"
American Economic Review,
American Economic Association, vol. 84(5), pages 1157-73, December.
- Orley Ashenfelter & Alan Krueger, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," Working Papers 683, Princeton University, Department of Economics, Industrial Relations Section..
- Alan Krueger & Orley Ashenfelter, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," NBER Working Papers 4143, National Bureau of Economic Research, Inc.
- Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2008.
"Housing Busts and Household Mobility,"
NBER Working Papers
14310, National Bureau of Economic Research, Inc.
- Hanushek, Eric A. & Quigley, John M., 1979. "The dynamics of the housing market: A stock adjustment model of housing consumption," Journal of Urban Economics, Elsevier, vol. 6(1), pages 90-111, January.
- Stein, Jeremy C, 1995.
"Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects,"
The Quarterly Journal of Economics,
MIT Press, vol. 110(2), pages 379-406, May.
- Jeremy C. Stein, 1993. "Prices and Trading Volume in the Housing Market: A Model with Downpayment Effects," NBER Working Papers 4373, National Bureau of Economic Research, Inc.
- Nada Wasi & Michelle J. White, 2005. "Property Tax Limitations and Mobility: The Lock-in Effect of California's Proposition 13," NBER Working Papers 11108, National Bureau of Economic Research, Inc.
- Ferreira, Fernando, 2010.
"You can take it with you: Proposition 13 tax benefits, residential mobility, and willingness to pay for housing amenities,"
Journal of Public Economics,
Elsevier, vol. 94(9-10), pages 661-673, October.
- Fernando Ferreira, 2008. "You Can Take it With You: Proposition 13 Tax Benefits, Residential Mobility, and Willingness to Pay for Housing Amenities," Working Papers 08-15, Center for Economic Studies, U.S. Census Bureau.
- 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.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:fip:fednsr:526. 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: (Amy Farber)
If references are entirely missing, you can add them using this form.