Thursday, January 27, 2011

Negative Equity Homeowners Are More Likely To Move Than Positive Equity Homeowners

From a recent research paper, "Negative Equity Does Not Reduce Homeowners' Mobility" by Sam Schulhofer-Wohl, Federal Reserve Bank of Minneapolis, Research Department, Working Paper 682, December 2010:
negative-equity homeowners are more rather than less likely to move.
homeowners with negative equity are at least as mobile as those with positive equity, holding other characteristics constant. Homeowners with extremely negative equity are especially mobile.
The paper's complete abstract:
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.
Read the full research paper here.

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