Housing economists and industry watchers have long been operating with the understanding that homeowners underwater on their mortgages were tethered to those properties and therefore unlikely to move, thanks to research by the National Bureau of Economics Research (NBER) that evidenced such a trend. But in a new paper, economist Sam Schulhofer-Wohl of the Federal Reserve Bank of Minneapolis is calling that data into question. Pro Publica reports:
In the original NBER research paper, all entries recorded as renters or vacancies were dropped from the data, so that only homes with a different owner were counted as a "move." … But if you owed more than your home was worth and were desperate for a job, maybe you'd rent while you left to try greener pastures, or you might even ditch the house altogether, especially if the bank was going to foreclose on you anyway.
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Learn more about markets featured in this article: Minneapolis-St. Paul, MN.