Housing equity, residential mobility and commuting

Gintautas Bloze*, Morten Skak

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Highly productive economies require a flexible labor force with workers that move in accordance with the changing demand for goods and services. In times with falling housing prices, the mobility of home owning workers may be hampered by a lock-in effect of low or even negative housing equity. This paper explores the effect of housing equity on both the residential mobility and the commuting pattern of homeowners. We merge administrative registers for the Danish population and properties and get highly reliable micro data for our analysis. We find that low and negative housing equity substantially reduces residential mobility among homeowners. The negative effect of locked-in low equity families on labor market mobility may be mitigated by commuting. However, our results show that family heads in low or negative equity homes are not found to commute more than households with higher housing equity, but also that a considerable fraction of home owning family heads commute. The analysis of the joint decision of homeowners to commute or move shows that the option of moving, as an alternative to not moving and not commuting, is chosen by five to six percent of homeowners with low housing equity, while the option of not moving but commuting is chosen by 60%.

Original languageEnglish
JournalJournal of Urban Economics
Volume96
Pages (from-to)156-165
ISSN0094-1190
DOIs
Publication statusPublished - 1. Nov 2016

Keywords

  • Commuting
  • Home equity
  • LTV ratio
  • Mobility
  • Mortgage lock-in

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