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Wednesday, June 02, 2010

Housing Bust and Labor Immobility

by Calculated Risk on 6/02/2010 08:47:00 PM

Here is a theme we've been discussing for a few years - when a homeowner is underwater, it is difficult to make a career move ...

From Rana Cash at the Atlanta Journal-Constitution: Real estate market stalls recruiting, promotions (ht Ann)

When executive Wade Ledbetter leaped at the opportunity to move up in his company, the shackles of relocation snatched him back down to earth.

That fabulous promotion came with a price: The $30,000 he’d invested in home improvements, the 20 percent he’d put down on his house and the extra payment every year for 7 1/2 years would be a wash, along with settling on a selling price well below what he’d paid for the home and just about all its contents. Add living away from his family in a one-bedroom apartment for eight months while his home languished on the market and his frustration accrued.

“It was horrible,” said Ledbetter, who relied in part on relocation assistance from his company. “It was constant, horrid stress. There were a number of times I said to myself, ‘What have I done?’ ”
Negative equity is impacting one of the historic strengths of the U.S. labor market - the ability of households to easily move from one region to another for a better employment opportunity.