Working Paper: NBER ID: w14310
Authors: Fernando Ferreira; Joseph Gyourko; Joseph Tracy
Abstract: Using two decades of American Housing Survey data from 1985-2005, we estimate the impact on household mobility of owners having negative equity in their homes and of rising mortgage interest rates. We find that both lead to lower, not higher, mobility rates over time. The impacts are economically large, with mobility being almost 50 percent lower for owners with negative equity in their homes. This does not imply that current worries about defaults and owners having to move from their homes are entirely misplaced. It does indicate that, in the past, the lock-in effects of these two factors were dominant over time. Our results cannot simply be extrapolated to the future, but policy makers should begin to consider the consequences of lock-in and reduced household mobility because they are quite different from those associated with default and higher mobility.
Keywords: housing; mobility; negative equity; mortgage rates
JEL Codes: R0; R21; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Negative Equity (G32) | Reduced Mobility (J62) |
| Rising Mortgage Interest Rates (E43) | Reduced Mobility (J62) |
| Property Tax Increase (H29) | Reduced Mobility (J62) |
| Negative Equity (G32) | Lock-in Effect (E43) |