Mobility Of Homeowners Research Articles

Property tax‐induced mobility and redistribution: Evidence from mass reappraisals

AbstractI investigate the effect of property tax changes on homeowner mobility and voted tax rates using a panel of assessment and sales records in Ohio. I use redistributive mass reappraisals that cause changes in an individual's tax price of local services to examine how changes in homeowner's tax bills influence mobility. I find that a $0.10 increase in the price per dollar of services leads to a 5% increase in the likelihood of sale with no change in foreclosure probability. I also find suggestive evidence of increased voted tax rates when the ratio of median to mean taxable value decreases.

The effects of negative house price changes on migration: Evidence across U.S. housing downturns

I estimate the extent to which negative house price changes lower mobility for some homeowners. My identification strategy employs a reduced-form model that uses variation in state-year house price changes, as well as variation in a homeowner's exposure to house price changes, based on pre-existing leverage. I find that house price declines cause migration to decrease for homeowners that have low equity, but that there is no effect for the most leveraged homeowners. Differences in default costs across states do not appear to affect the mobility of homeowners in negative equity. Housing lock-in effects are larger in the most recent recession, affecting both in-state and interstate migration.

Does Mortgage Debt Affect Homeowner Mobility?

This paper examines the effect of housing leverage on the mobility of homeowners. We exploit a policy innovation in the form of the Tax Reform Act, 1986 (TRA) to address an increase in housing leverage. The TRA eliminated the tax deductibility on all personal loans except for interest payments on mortgage debt. This tax-shield encouraged homeowners to increase housing leverage by switching from unsecured to secured (mortgage) loan. Using PSID data for the period, 1983-1997, we find that the higher housing leverage due to the TRA constrains homeowner mobility. However, the TRA has no impact on renter mobility.

THE PUZZLE OF JOB SEARCH AND HOUSING TENURE: A RECONCILIATION OF THEORY AND EMPIRICAL EVIDENCE

ABSTRACTOswald's thesis posits that homeowners should have longer unemployment spells than renters due to restricted mobility, but repeatedly the reverse is found. I contribute to solve this puzzle analyzing both job search intensity and unemployment duration. First, I show that homeowner's mobility constraints have a negative impact on search. Theoretically, it is shown in a search model with moving costs. Using U.K. Labour Force Survey (LFS) data, it is confirmed when considering outright owners, while leveraged owners have the highest search. Second, I find evidence that homeowners select search methods associated with shorter unemployment spells, suggesting that they search more efficiently.

Staying at Home: The Effect of Proposition 13 on Municipal Revenue Sources

The effects of California's Proposition 13 are far reaching in both California state and municipal government finance. For local governments, who relied most heavily on property taxes to fund infrastructural development and public services, the effects were especially pronounced. Previous findings have indicated that this has caused local governments to substitute away from property taxes towards uncapped revenue sources, such as sales taxes and charges and fees. To better understand the effects of Proposition 13 on local government finance, we leverage a peculiarity in the letter of the law: homes are reassessed upon sale. As such, we test the effects of high homeowner mobility on local government finances. We find that in municipalities with greater mobility have larger proportions of their revenue generated by property taxes, indicating that as more houses are reassessed, local governments are shifting their revenue burdens back towards property taxes.

House price dynamics, unemployment, and the mobility decisions of low-income homeowners

Using data from the Community Advantage Panel Survey and a multivariate proportional hazards framework, we investigate relationships among house price dynamics, unemployment, and the mobility and housing tenure decisions of low-income homeowners in the United States between 2005 and 2012. In recent years, house prices have declined and unemployment rates have increased in many parts of the country, and existing literature provides mixed insights into whether housing market conditions have impeded recovery in the labor market. Our results suggest that negative equity and falling house prices are associated with delayed homeowner mobility, while finding employment or living in an area of increasing unemployment is associated with increased mobility. Those homeowners who experienced a change in employment status during the study period are largely distinct from those who experienced negative equity. In addition, most movers who remained homeowners relocated because of changes in family structure, while those movers who became renters were more likely to move because of housing costs or changes in employment status. Therefore, we infer that a transition out of homeownership may be more likely for those low-income homeowners who move for employment reasons, but that low-income homeowners generally do not appear to be prevented from moving to take advantage of employment opportunities when necessary.

Falling House Prices and Labor Mobility: Evidence from Matched Employer-Employee Data

This study uses worker-level employment data from the U.S. Census Bureau to test whether falling home prices affect a worker’s propensity to take a job in a different metropolitan area from where he is currently located. Using a sample of workers from the American Community Survey, I employ a within-MSA-time estimation that compares homeowners to renters in their propensities to relocate for jobs according to data from the Longitudinal Employer Household Dynamics database. This strategy allows me to disentangle the influence of house prices from that of other time-varying, location-specific shocks. Estimates show that homeowners who have experienced declines in the nominal value of their home are approximately 20% less likely to take a new job in a location outside of the metropolitan area that they currently live and work in, relative to an equivalent renter. This evidence is consistent with the hypothesis that housing lock-in has contributed to the decreased labor mobility of homeowners during the recent housing bust.

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

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.

Housing capital-gains taxation and homeowner mobility: Evidence from the Taxpayer Relief Act of 1997

We provide new evidence on the impact of housing capital-gains taxation on homeowner behavior by examining residential mobility before and after the Taxpayer Relief Act of 1997 (TRA97), which generated the most sweeping reform of capital-gains taxation in the last two decades. In addition to lowering marginal tax rates on long-term capital gains for all assets, TRA97 also eliminated any differential treatment of housing gains above and below age 55, allowing all homeowners to qualify for capital-gains exclusions. Utilizing data drawn from the Current Population Survey (CPS) on either side of the law change (1996 and 1998) on homeowners just above (56–58 year olds) and below (52–54 year olds) the age-55 threshold and a reduced-form, difference-in-difference empirical approach, our estimates suggest that the repeal of the differential capital-gains tax treatment by age embodied in TRA97 had an economically important and statistically significant impact on the residential mobility of under-55 homeowners. Across a variety of specifications, the repeal raised the mobility rate by around 1–1.4 percentage points, which, for a mean mobility rate of 4 percentage points, represented an increase in the mobility rate of homeowners in their early 50s by 22–31%. Furthermore, the bulk of this effect was concentrated among highly mobile homeowners who a priori were more likely to have wanted to trade down (e.g., divorced, empty nesters), those facing higher capital gains tax rates, and those living in states that had experienced higher rates of nominal appreciation.

Homeownership and Labour Market Behaviour: Interpreting the Evidence

This paper reviews the empirical research that has been generated by Oswald's thesis, which claims that there is a causal relationship from homeownership to unemployment. The literature confirms a decreasing effect of homeownership on geographical mobility of workers, but does not in general confirm that homeowners have longer unemployment spells or higher unemployment rates. Even though this finding is related to heterogeneity in the labour force and associated selectivity effects, there are clear indications that there is also an effect of homeownership on the search for jobs on the local labour market, especially for highly leveraged homeowners. To offer an integrated representation of the various forces at work, this paper proposes an umbrella model with endogenous search intensity that is consistent with much of the empirical evidence. In particular, it predicts lower geographical mobility of homeowners as well as higher exit rates from unemployment - by acceptance of jobs on the local labour market.

Housing appreciation, mortgage interest rates, and homeowner mobility

This paper presents a model of the optimal timing of tradeup, which considers consumption and investment motives of homeownership. Households determine the optimal timing of trading up so as to maximize their intertemporal utility of both housing and nonhousing consumption. First we consider current homeowners, who already own a house and expect that they trade up to a more valuable house at some point in the future. Housing appreciation tends to induce an earlier optimal timing of trading up. Moreover, housing appreciation makes current homeowners better off in terms of welfare. However, current homeowners suffer from a rise in mortgage interest rates. Second, we consider first-time home buyers, who have decided to buy a house and expect to trade up to a more valuable house in the future. Their initial housing consumption is determined by an initial downpayment constraint. In this case, the effect of housing appreciation on the optimal timing of trading up is ambiguous and, unlike current homeowners, first-time home buyers suffer from housing appreciation. Moreover, as current homeowners, first-time home buyers suffer from a rise in mortgage interest rates. Most of the theoretical analytic results are ambiguous. Accordingly, we perform numerical simulations based on the theoretical model in order to determine the most likely comparative effects for a stylized set of parameters. As is apparent, the model captures the recent observations on homewner mobility and suggests that macroeconomic variables such as housing appreciation and mortgage interest rates effect the optimal timing of trading up and homeowner's welfare. Nevertheless, the model in this paper has several shortcomings, which should be the subject of future research. First, transaction costs are ignored. If transaction costs are incorporated, the lock-in effect from a rise in mortgage interest rates is well explained. However, the general analysis above is not altered in any essential way. Second, multiple moves are not considered in this model. Therefore, we concentrate on the timing of one tradeup as opposed to the timing and frequency of trading up. In a different vein, it would be interesting to test empirically the importance of the effects of macroeconomic variables on trading up by using microdata.

Interest Rate Variations, Mortgage Prepayments and Household Mobility

The volatility of interest rates and the deregulation of the mortgage lending sector have meant that many homeowners also own mortgages at terms more favorable than current interest rates. This paper presents a model of residential mobility decisions and an empirical analysis that evaluates the importance of the ownership of these mortgages upon the mobility of homeowners. The results, based upon proportional and nonproportional hazard models, indicate that these effects are quite large. The empirical analysis distinguishes between different regulatory regimes that govern the assumption of existing mortgages, and indicates the implications of these findings for the pricing and valuation of mortgage-backed securities. Copyright 1987 by MIT Press.