"Homeowners are much less likely to move than renters, especially during a downturn, when they aren’t willing (or can’t afford) to sell at market prices.
As a result, they often stay in towns even after the jobs leave. That may be why a study of several major developed economies between 1960 and 1996, by the British economist Andrew Oswald, found a strong relationship between increases in homeownership and increases in the unemployment rate; a ten-per-cent increase in homeownership correlated with a two-per-cent increase in unemployment. (In the U.S., it may be worth noting, the states that have the highest unemployment rates—states like Alabama, Michigan, Mississippi—are also among those with the highest homeownership rates.) And reluctance to move not only keeps unemployment high in struggling areas but makes it hard for businesses elsewhere to attract the workers they need to grow."
Friday, March 7, 2008
Is home ownership increasing unemployment in states like Michigan? This week's New Yorker magazine suggests a link:
at 7:33 PM
Labels: home ownership, The New Yorker, Unemployment
Thanks for commenting. You might enjoy my book about Flint called "Teardown: Memoir of a Vanishing City," a Michigan Notable Book for 2014 and a finalist for the 33rd Annual Northern California Book Award for Creative NonFiction. Filmmaker Michael Moore described Teardown as "a brilliant chronicle of the Mad Maxization of a once-great American city." More information about Teardown is available at www.teardownbook.com.
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My understanding is that people who can move do move. Amongst those more likely to move would be renters. Seeing as they have the ability to leave their property behind without any responsibility (outside of the last month's rent and notification of the landlord), they move out.ReplyDelete
Homeowners, however, have to deal with the responsibility of owning a house, paying taxes and other things. Add to that the fact that selling a house in a depressed place means less money and more time to do so (assuming the house can be sold), and it's harder for the homeowner to move.
Add into the fact that the homeowner has an identity with the house and an investment in the community (whereas most renters have little or none of either) and you can see how home ownership percentages can increase with unemployment.
Just my two cents, from a former flintoid.