Wednesday, October 01, 2008

House Arrest

For months now the news on the local housing market has been that the number of sales is way off. Part of the reason for that is not so surprising. Where do most people moving to the Pittsburgh region come from?? Cleveland, Washington DC, New York City and Philadelphia are a huge part of the migration flow into Pittsburgh. At least Cleveland, DC and NY are near the center of the real estate meltdown of late. What does that mean. I am pretty sure there are folks who essentially trapped in the homes they live in... either can't pick up and move here because they are unable to sell their existing homes, or who might be moving here, but can't buy a house here until their previous home sells. At the same time, job market weakness in those other markets is depressing the incentives some here might have to move to jobs in those other regions. If you don't move, then you don't have a reason to try and sell your house here.

The real estate-migration link jibes pretty well with this Slate story the other day covering some real economic research that documents how depressed real estate values essentially trap people in their homes. The net result: a huge inefficiency in the labor market nationally.

That real-estate induced lack of migration is by the way is a short term version of what I am pretty sure happened across the region in the 1980's as lower home values kept folks from moving as much as they might have otherwise. Thus the statistic that pops up on occasion that Pittsburgh (city or region) is typically near the top in terms of what percentage of households have lived in their current place of residence for 30 or more years.


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