On a national level, this phenomenon is hurting the efficiency of the labor market, says real estate professor Joe Gyourko at the Wharton School at the University of Pennsylvania. With these constraints, employers and employees aren't finding their best match.
"Outside of outright foreclosure itself and the loss of wealth, it's probably the most important impact of overleveraging the housing market that we're going to have in this cycle," Gyourko says.
Some parts of the country — namely the East and West Coast markets — are likely to recover more quickly. But not everyone will be able to wait for home prices to recover and continue to forgo better jobs. In other words: At some point, people will abandon their houses.
Monday, August 30, 2010
Home Sales and Labor Mobility
The inability of people to sell their houses impedes labor mobility
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Also explains why governments would have an incentive to increase home ownership. Increased home ownership decreases labor mobility and makes local and state taxes harder to avoid. Hrm, although... it was mostly the federal government doing the subsidization, and I can't think of a good method for that incentive to be communicated from the states to the federal government.
ReplyDeleteWe need more property management firms to offer to lease these homes on behalf of the home owners. States could relax taxation on revenue from rental properties; well structured tax arrangements could lead to states recognizing an overall increase in tax revenues from the uptick in new rental properties.
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