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Title:Housing busts and household mobility PDF Logo
Authors:Ferreira, Fernando
Gyourko, Joseph
Tracy, Joseph
Issue Date:2008
Series/Report no.:Staff Report, Federal Reserve Bank of New York 350
Abstract:Using two decades of American Housing Survey data from 1985 to 2005, we estimate the influence of negative home equity and rising mortgage interest rates on household mobility. We find that both factors lead to lower, not higher, mobility rates over time. The effects are economically large - mobility is almost 50 percent lower for owners with negative equity in their homes. This finding does not imply that current concerns over defaults and homeowners having to relocate are entirely misplaced. It does indicate that, in the past, the mortgage lock-in effects of these two factors were dominant over time. Policymakers may wish to begin considering the consequences of mortgage lock-in and reduced household mobility because they are quite different from the consequences associated with default and higher mobility.
Subjects:Household mobility
negative equity
mortgage lock-in
JEL:R23
R21
R51
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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