Negative Equity Does Not Reduce Homeowners' Mobility
Some commentators have argued that the housing crisis may harm labor markets because homeowners who owe more than their homes are worth are less likely to move to places that have productive job opportunities. I show that, in the available data, negative equity does not make homeowners less mobile. In fact, homeowners who have negative equity are slightly more likely to move than homeowners who have positive equity. Ferreira, Gyourko and Tracy's (2010) contrasting result that negative equity reduces mobility arises because they systematically drop some negative-equity homeowners' moves from the data.
I thank Andra Ghent for helpful comments and Joan Gieseke for editorial assistance. The views expressed herein are those of the author and not necessarily those of the Federal Reserve Bank of Minneapolis, the Federal Reserve System, or the National Bureau of Economic Research.
Sam Schulhofer-Wohl, 2012. "Negative equity does not reduce homeownersâ mobility," Quarterly Review, Federal Reserve Bank of Minneapolis. citation courtesy of