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Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?

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  • Sewin Chan

    (Rutgers University)

Abstract

Falling house prices have caused numerous home owners to suffer capital losses. Those with little home equity may be prevented from moving because proceeds from the sale of their house are insufficient to repay their mortgage and provide a new down payment. A data set of mortgages is used to examine the magnitude of these constraints. Estimates show that average mobility would have been 24% higher after four years, had real house prices increased at 1980s rates, and 10% higher if house values had merely kept up with inflation. Among those with high initial loan-to-values, the differences are even greater.

Suggested Citation

  • Sewin Chan, 1998. "Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?," Departmental Working Papers 199816, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:199816
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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/1998-16.pdf
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    1. Andrew Carswell, 2009. "Does Housing Counseling Change Consumer Financial Behaviors? Evidence from Philadelphia," Journal of Family and Economic Issues, Springer, vol. 30(4), pages 339-356, December.

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    More about this item

    Keywords

    lock-in; mobility; mortgages;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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