Spatial lock-in: Do falling house prices constrain residential mobility?

Research output: Contribution to journalArticlepeer-review

Abstract

Falling house prices have caused numerous homeowners to suffer capital losses. Those with little home equity may be prevented from moving because of imperfections in housing finance markets: the proceeds from the sale of their home may be insufficient to repay their mortgage and provide a down payment on a new home. A data set of mortgages is used to examine the magnitude of these constraints. Estimates show that average mobility would have been 24% higher after 3 years had house prices not declined, and after 4 years, it would have been 33% higher. Among those with high initial loan-to-value ratios, the differences are even greater.

Original languageEnglish (US)
Pages (from-to)567-586
Number of pages20
JournalJournal of Urban Economics
Volume49
Issue number3
DOIs
StatePublished - 2001

Keywords

  • Down payment
  • House price decline
  • Liquidity constraint
  • Lock-in
  • Mobility
  • Mortgage

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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