Moving to Opportunity? The Geography of the Foreclosure Crisis and the Importance of Location

Abstract

Over six million households experienced foreclosure during the financial crisis. Where did they move, how did they fare, and why? First, we create a new longitudinal dataset between 2006 and 2011 from their point of foreclosure to their relocation. Despite significant heterogeneity in mobility outcomes, we find that individuals move to, on average, higher quality locations. Second, we quantify the contributions of (i) local labor market conditions, (ii) local composition effects, and (iii) state foreclosure institutions towards mobility outcomes. Third, we find that the return to moving to another county following foreclosure, relative to census tracts within-county, is 2.3%.

Keywords: foreclosure, financial crisis, mobility, unemployment

JEL Classification: J61, J24, R31, R51