Holding onto the Past: Previous Homes, Post-Move Housing Consumption, and the Great Recession

55 Pages Posted: 12 May 2023

See all articles by Xun Bian

Xun Bian

University of North Texas

Zifeng Feng

The University of Texas at El Paso

Zhenguo (Len) Lin

Florida International University (FIU) - Hollo School of Real Estate

Yingchun Liu

Dept. of Finance, Insurance, Real Estate and Law, University of North Texas

Date Written: April 29, 2023

Abstract

We document that households relocated during the recent Great Recession and its aftermath were substantially more likely to hold their previous homes for an extended period of time. We identify two contributing factors to this phenomenon. First, falling house prices pushed many homes into the “negative-equity” and “near-negative-equity” territories, and this made it challenging for owners to sell their homes. Second, we also show that falling home values had a more widespread effect that made all homeowners, regardless of their equity positions, more reluctant to sell. Additionally, we find households without mortgages are more likely to hold previous homes. Overall, we show the relationship between the LTV ratio and the likelihood of holding is U-shaped. We further examine the impact of holding previous homes on post-move housing tenure and housing consumption choices. We find that holding previous homes is associated with renting for a longer period. For households that bought new homes after relocation, holding previous homes is associated with new residences that are less expensive and smaller. Our results suggest that for households that moved during the housing bust, the Great Recession has a long-lasting effect on their housing consumption choices.

Keywords: housing consumption, mobility, housing equity, the Great Recession

JEL Classification: D14, R31

Suggested Citation

Bian, Xun and Feng, Zifeng and Lin, Zhenguo and Liu, Yingchun, Holding onto the Past: Previous Homes, Post-Move Housing Consumption, and the Great Recession (April 29, 2023). Available at SSRN: https://ssrn.com/abstract=4444725 or http://dx.doi.org/10.2139/ssrn.4444725

Xun Bian (Contact Author)

University of North Texas ( email )

G. Brint Ryan College of Business
1155 Union Circle #311160
Denton, TX 76203
United States
(940) 369-8309 (Phone)

Zifeng Feng

The University of Texas at El Paso ( email )

500 W. University Ave.
El Paso, TX 79968
United States

HOME PAGE: http://https://sites.google.com/view/zifeng-feng/home

Zhenguo Lin

Florida International University (FIU) - Hollo School of Real Estate ( email )

Miami, FL 33199
United States
3057799248 (Phone)

Yingchun Liu

Dept. of Finance, Insurance, Real Estate and Law, University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States

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