Housing busts and household mobility: an update

Fernando Ferreira, Joseph Gyourko and Joseph Tracy

No 526, Staff Reports from Federal Reserve Bank of New York

Abstract: This paper provides updated estimates of the impact of three financial frictions?negative equity, mortgage lock-in, and property tax lock-in?on household mobility. We add the 2009 wave of the American Housing Survey (AHS) to our sample and also create an improved measure of permanent moves in response to Schulhofer-Wohl?s (2011) critique of our earlier work (2010). Our updated estimates corroborate our previous results: Negative equity reduces household mobility by 30 percent, and $1,000 of additional mortgage or property tax costs reduces household mobility by 10 to 16 percent. Schulhofer-Wohl?s finding of a slight positive correlation between mobility and negative equity appears due to a large fraction of false positives, as his coding methodology has the propensity to misclassify almost half of the additional moves it identifies relative to our measure of permanent moves. This also makes his mobility measure dynamically inconsistent, as many transitions originally classified as a move are reclassified as a nonmove when additional AHS panels become available. We conclude with directions for future research, including potential improvements to measures of household mobility.

Keywords: Property tax; Equity; Mortgages; Housing - Finance (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr526.pdf (application/pdf)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr526.html (text/html)

Related works:
Journal Article: Housing busts and household mobility: an update (2012)
Working Paper: Housing Busts and Household Mobility: An Update (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:526

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().