A recent study contradicts the common wisdom that many homeowners are unlikely to pick up and move to new jobs if they are likely to lose money when selling their homes. “The equity in a home is not a crucial part of most unemployed people’s decisions to relocate for a job,” according to a Federal Reserve Bank of Cleveland study. “If a job is available, the economic benefit of accepting it outweighs the potential costs of disposing of the home.”
The researchers found these results even when the homeowners had subprime or similar mortgages. “We conclude that negative equity does not limit job-related mobility and, hence, is not a major reason for elevated aggregate unemployment in the United States,” the researchers wrote.
