How Does Home Equity A¤ect Mobility?

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Date Published 2012
Primary Author Fredrik Anderssony, Tom Mayockz
Other Authors
Theme Housing Finance and the Economy


This paper investigates the relationship between home equity and household mobility using a dataset that allows us to construct home equity measures that are more accurate than those that have been used in previous work on the equity-mobility hypothesis and permit us to disentangle mortgage default induced mobility from other types of mobility. Furthermore, the countervailing nature of down payment effects and default-induced mobility suggest a U- shaped relationship between home equity and mobility. Given the prevalence and depth of negative equity during the recent housing, it is a priori ambiguous whether equity erosion has contributed to increased or decreased household mobility. Preliminary results for the state of Florida show that the declining equity signifi?cantly reduces mobility. Our results also suggest that loan payment default behavior of underwater borrowers have contributed to signifi?cantly hamper these effects.

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