Housing Lock: Dutch Evidence on the Impact of Negative Home Equity on Household Mobility

55 Pages Posted: 26 Dec 2017

See all articles by Asaf Bernstein

Asaf Bernstein

University of Colorado at Boulder; National Bureau of Economic Research (NBER)

Daan Struyven

Goldman Sachs

Date Written: December 19, 2017

Abstract

This paper employs Dutch administrative population data to test the “housing lock hypothesis”: the conjecture that homeowners with negative home equity, low levels of financial assets and restricted opportunities to borrow reduce their mobility. We exploit variation in home equity solely driven by the timing of home purchase within a municipality and the harshness of Dutch recourse laws, which allow us to isolate the housing lock channel. Instrumented negative home equity is associated with a 74-79% decline in mobility, and the effects are substantially larger for households with low financial asset holdings or moves over longer distances.

Keywords: housing lock, mobility, home equity, negative equity, household debt

JEL Classification: D10, G1, J01, J20, J60, J61, R20

Suggested Citation

Bernstein, Asaf and Struyven, Daan, Housing Lock: Dutch Evidence on the Impact of Negative Home Equity on Household Mobility (December 19, 2017). Available at SSRN: https://ssrn.com/abstract=3090675 or http://dx.doi.org/10.2139/ssrn.3090675

Asaf Bernstein

University of Colorado at Boulder ( email )

Campus Box 419
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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