The role of the housing market in the migration response to employment shocks (original) (raw)

Migration, housing market, and labor market responses to employment shocks

Journal of Urban Economics, 2012

One reason for the United States' economic success is the willingness of its residents to follow jobs. Households' decisions to move depend not only on job prospects but also on the relative cost of housing. I investigate how the housing market affects the flow of workers across cities. This occurs through at least two channels: the relative mobility of homeowners versus renters, and the relative cost of housing across markets. I use homeownership rates to measure the former, and use an index that measures house prices across metropolitan statistical areas (MSAs) and the price elasticity of housing supply to capture the latter. To show how variation in the these housing market factors not only affects cross-city migration but also the housing and labor markets, I estimate a VAR model of migration, employment, wages, house prices, and new housing supply using annual data from 277 US MSAs for 1990-2006. The response functions based on labor supply and demand shocks show substantial variation when evaluated at different values of the homeownership rate, the price elasticity of housing supply, and relative housing prices. I also allow for spillover effects in the model that reflect the impact of a labor demand shock in the nearest city.

Income Migration and Home Price Trajectories in the United States

2015

This paper models one facet of the relationship between housing market price shifts and income migration among U.S. regions: how income migration relates to regional housing price clusters. The tremendous negative slide in national housing prices from 2006 to 2012 had an uneven spatial distribution. These differences are explored within the context of net income and net population migration (movement of money with people). Median housing prices for urban areas from 2005 to 2010 and IRS county-to-county migration data are used to compare income migration among urban clusters of similar housing price trends. Selective migrations of people and income in and out of these housing clusters have either exacerbated the housing bust or softened its decline. Income effectiveness, or the gain or loss of money caused by migration, is a helpful measure that can be used to help predict future housing price movements.

The Effect of Homeownership on Geographic Mobility and Labor Market Outcomes

2011

This paper examines the effect of homeownership on mobility and labor income and provides new evidence that owning a home makes workers less likely to move in response to labor market shocks. To identify this effect, I develop and estimate a structural dynamic model of housing choices, migration decisions and labor market outcomes. I find that owning a home has a large negative effect on the probability of moving in response to a labor market shock and a small negative effect on labor income. Owners suffering from a decrease in home equity are 40 percent less mobile. I conduct two policy experiments. The first shows that the home mortgage deduction has a positive effect on homeownership, affects mobility and creates an incentive to buy larger houses.

Housing Liquidity, Mobility, and the Labour Market

The Review of Economic Studies, 2012

The relationships among geographical mobility, unemployment and the value of owner-occupied housing are studied in an economy with heterogeneous locations and search frictions in the markets for both labour and houses. Di¤erences in labour market conditions between cities a¤ect the speed with which houses may be sold-that is, the liquidity of housing. At the same time housing market conditions a¤ect employment decisions and thus the allocation of labour across cities. In equilibrium, unemployment rates for home-owners are higher than for otherwise identical renters. Unemployment and home-ownership rates are, however, negatively correlated across cities. In a parameterized example we …nd that, although renters are much more mobile than owners, the impact of home-ownership on aggregate unemployment is quantitatively small.

House prices and regional labor markets

The Annals of Regional Science, 1999

This paper examines some potentially significant interactions between local housing and labor markets. We use an error correction model with equations explaining the average manufacturing wage, the unemployment rate, the labor force and the average house price in an urban area. Estimates are reported for the Hartford, Houston, Fort Lauderdale and Milwaukee areas using quarterly data for the 1980 s. We find some evidence that unemployment and labor force changes affect house prices and that house prices have a significant effect on the size of the labor force.

The Geography of Residential Turnover in Twenty-seven Large US Metropolitan Housing Markets, 1985-95

Urban Studies, 2000

Previous research on variations in mobility rates across metropolitan areas, documented the link between immigration and local mobility, and the way in which local mobility creates 'hot' and 'cold' housing markets. The research in this paper confirms and extends those analyses by examining the interplay between the relocation process and the structure of metropolitan housing markets. The results show that more than three-quarters of the turnover is generated by renters and most of this by households under 35 years of age. It also shows that variations in mobility rates can be predicted by variations in new construction, though it is clear that ultimately it is the underlying population growth which is the critical variable. House prices also vary across metropolitan areas and are influenced by city size, but the major determinants of variation in house prices are household income (a measure of upward pressure on prices) and the tenure structure of the local market. T...

House Prices, Mortgage Debt, and Labor Mobility

SSRN Electronic Journal, 2017

Using detailed credit and employment data for the United States, we estimate the effect of mortgage debt on labor mobility. We find a robust negative relation between the loanto-value ratio (LTV) on the primary residence and labor mobility. Individuals with negative home equity are 3.6 percentage points less likely to move in a year. This effect is stronger for sub-prime and liquidity-constrained borrowers. We also find that diminished labor mobility owing to higher LTVs depresses labor income growth, especially for individuals with less access to liquidity and longer tenure in their current job. Consistent with a housing-lock explanation, we find that individuals with higher LTVs have higher intra-ZIPcode job mobility. Overall we document signicant spillover from the housing market to the labor market. ** PLEASE DO NOT CITE OR CIRCULATE WITHOUT PERMISSION * Comments welcome. We are deeply grateful to "The Provider" for supporting the research and allowing us access to their data. We thank the Wells Fargo Center for Finance and Accounting Research and Center for Research in Economics and Strategy and the Olin Business School for financial support. For helpful comments, we thank Naser Hamdi and Stephanie Cummings.

Intra‐Urban migration and housing submarkets: theory and evidence

Housing Studies, 2004

University developed a framework for the analyses of urban housing markets which was based around the concept of housing submarkets and household migration. There is now widespread agreement amongst housing economists that submarkets should be adopted as a working hypothesis but the concept has been reformulated in terms of intra-urban relative house price differentials. The accepted test for submarket existence uses a hedonic model of house prices which assumes market equilibrium. This paper returns to an analysis of submarkets which focuses on spatial migration patterns. By examining household intra-urban mobility patterns in the Glasgow housing market it is possible to demonstrate that submarkets tend to be self-contained. The analysis also suggests that the current standard statistical tests may be incomplete and in the case of Glasgow underestimate the number of submarkets.

The Decision to Move House and Aggregate Housing-Market Dynamics

Journal of the European Economic Association, 2020

Using data on house sales and inventories, this paper shows that housing transactions are driven mainly by listings and less so by transaction speed, thus the decision to move house is key to understanding the housing market. The paper builds a model where moving house is essentially an investment in match quality, implying that moving depends on macroeconomic developments and housing-market conditions. The number of transactions has implications for welfare because each transaction reduces mismatch for homeowners. The quantitative importance of the decision to move house is shown in understanding the U.S. housing-market boom during 1995–2003. (JEL: D83, E22, R31)

Housing Busts and Household Mobility: An Update

2011

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.