Monday, December 22, 2008

Housing Bust Impacting Labor Mobility

by Bill McBride on 12/22/2008 07:30:00 PM

From the WSJ: U.S. State-to-State Migration Slowed, Census Reports

The great migration south and west in the U.S. is slowing, thanks to a housing crisis that is making it hard for many to move.
...
Most southern and western states are not growing nearly as fast as they were at the start of the decade, pausing a long-term trend fueled by the desire for open spaces and warmer climates, according to population estimates released Monday by the Census Bureau.
...
"People want to go to where it's warm and where there are a lot of amenities, that's a long- term trend in this country," said William Frey, a demographer at the Brookings Institution in Washington.

"But people have stopped moving," he said. "It's a big risk when you move to a new place. You need to know that moving and getting a new mortgage is going to pay off for you."
As I noted early this year, approximately 1 in 8 households (the same proportion as with negative equity) will probably not accept a job transfer now because of depressed home values - and that is about 200,000 fewer households per year that will probably not move for better job opportunities.

One of the strengths of the U.S. labor market has been the flexibility associated with labor mobility - households could easily move from one region to another for better employment. The housing bust is now limiting this flexibility.