Housing Busts and Household Mobility: An Update
30 Pages Posted: 16 Nov 2011
There are 2 versions of this paper
Housing Busts and Household Mobility: An Update
Housing Busts and Household Mobility: an Update
Date Written: November 15, 2011
Abstract
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.
Keywords: negative equity, mobility
JEL Classification: R21, R31, R38
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Housing Busts and Household Mobility: an Update
By Fernando V. Ferreira, Joseph Gyourko, ...
-
Housing Busts and Household Mobility
By Fernando V. Ferreira, Joseph Gyourko, ...
-
Housing Busts and Household Mobility
By Fernando V. Ferreira, Joseph Gyourko, ...
-
Moving and Housing Expenditure: Transaction Costs and Disequilibrium
By Steven F. Venti and David A. Wise
-
Locked in the House: Do Underwater Mortgages Reduce Labor Market Mobility?
By Colleen Donovan and Calvin Schnure
-
What Drives Matching Efficiency? A Tale of Composition and Dispersion
By Regis Barnichon and Andrew Figura