Negative home equity reduces household mobility: Evidence from administrative data

Veldhuizen, Sander van; Vogt, Benedikt; Voogt, Bart

doi:10.1016/j.jhe.2018.06.010

Cited by 10 publications

(5 citation statements)

References 19 publications

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“…This might be especially true for homeowners, as they often have most of their savings invested in the house and can therefore be affected by changes related to the housing market, such as house prices and interest rates [ 21 ]. Yet, the majority of studies on this topic focus on the entire population [ 22 ] rather than specific age strata, such as older adults. One exception is a study conducted in the United States evaluating lock-in effects due to the financial crash in 2008 and a subsequent major decrease in housing prices.…”

Section: Introductionmentioning

confidence: 99%

Homeownership While Aging—How Health and Economic Factors Incentivize or Disincentivize Relocation: Protocol for a Mixed Methods Project

Schmidt¹,

Iwarsson²,

A³

et al. 2023

JMIR Res Protoc

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Background Many factors influence housing choices among older adults, but far from all have been identified. There is little systematic analysis that has included economic factors and virtually no knowledge about the interplay among perceived costs of moving, health status, and the mobility rate of older homeowners. It is currently unclear whether economic factors influence older adults’ willingness to move, and the effects of economic policies on their actual behavior in the housing market are largely unknown. Objective The overarching objective of the AGE-HERE project is to develop knowledge of the relationship between health and economic factors that incentivize or disincentivize relocation during the process of aging. Methods This project uses a mixed methods convergent design across 4 studies. The initial quantitative register study and subsequent qualitative focus group study will nurture the evidence base and the development of a national survey. The final study will synthesize and integrate the results of the entire project. Results Ethical approval for the register study (DNR 2022-04626-01) and focus group study (DNR 2023-01887-01) has been obtained. As of July 2023, data analyses (register study) and data collection (focus group study) are currently being conducted. The first paper based on the register data is expected to be submitted after the summer of 2023. Three meetings have been held with the nonacademic reference group. The qualitative data will be analyzed in the autumn. Based on the results of these studies, a survey questionnaire will be developed and distributed nationally during the spring of 2024, followed by data analyses in the autumn. Finally, the results from all studies will be synthesized in 2025. Conclusions Results from AGE-HERE will add to the knowledge base for research on aging, health, and housing and can play a critical role in guiding future policy decisions aiming to balance the housing market. Such developments may lower related social costs and support older adults to maintain active, independent, and healthy lives. International Registered Report Identifier (IRRID) DERR1-10.2196/47568

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Section: Introductionmentioning

confidence: 99%

Homeownership While Aging—How Health and Economic Factors Incentivize or Disincentivize Relocation: Protocol for a Mixed Methods Project

Schmidt¹,

Iwarsson²,

A³

et al. 2023

JMIR Res Protoc

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“…In turn, household asset portfolios that are dominated by housing wealth tend to be underdiversified, exposing households to large risks since house prices are very volatile (Ferreira et al, 2010, andCatte et al, 2004), and transaction costs associated with purchase, sale, and relocation tend to be significant. 1 While it is intuitive that in the face of large transaction costs house-price-induced fluctuations in home equity may be associated with lock-in effects restricting residential mobility (Engelhardt, 2003;Van Veldhuizen et al, 2020), additional effects can be expected. Two recent strands of literature focus on either mortgage default decisions (Bajari et al, 2011, Gerardi et al, 2018, and Guiso et al, 2013, or on the propensity to divorce (Farnham et al , 2011, Rainer and Smith, 2010, and Klein 2017.…”

Section: Introductionmentioning

confidence: 99%

“…Guiso et al (2013), for instance, show that it is likely that moral hazard plays a role in the US for those with large absolute values of negative home equity. They estimate that between 26% and 35% of mortgage defaults in the aftermath of the US 1 A common estimate for transaction costs used in the academic literature is in the order of magnitude of 10% of the house value (Weinberg et al(1981), Venti & Wise (1984), Linneman (1986), Goodman (1995), Haurin & Grill (2002), Engelhardt (2003), etc. ).…”

Section: Introductionmentioning

confidence: 99%

Till Debt Do Us Part: Strategic Divorces and a Test of Moral Hazard

et al. 2022

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“…Following the convention in Dutch studies, LTV ratios larger than 1.5 have been excluded from the analysis (e.g., Schilder & Conijn, ; Van Veldhuizen, Vogt, & Voogt, ). As information on loans and values originates from the same data set, we consider the (remaining) large LTV ratios plausible.…”

mentioning

confidence: 99%

Decreasing house prices and household mobility: An empirical study on loss aversion and negative equity

Steegmans

Hassink

2018

Journal of Regional Science

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This paper examines the effects of loss aversion and negative equity on household mobility. We stress the importance of studying these mechanisms simultaneously. By making use of a unique administrative data set of Statistics Netherlands, covering the period 2006–2011, we estimate the effects of loss aversion and negative equity. The results provide strong evidence for loss aversion, while less evidence is found for a lock‐in effect of negative equity. The results indicate that moderately underwater households do have a lower mobility, but heavily underwater households do not. Additional results indicate that the particularly high mobility of heavily underwater households is not default‐driven.

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Negative home equity reduces household mobility: Evidence from administrative data

Cited by 10 publications

References 19 publications

Homeownership While Aging—How Health and Economic Factors Incentivize or Disincentivize Relocation: Protocol for a Mixed Methods Project

Homeownership While Aging—How Health and Economic Factors Incentivize or Disincentivize Relocation: Protocol for a Mixed Methods Project

Till Debt Do Us Part: Strategic Divorces and a Test of Moral Hazard

Decreasing house prices and household mobility: An empirical study on loss aversion and negative equity

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