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Housing Lock: Dutch Evidence on the Impact of Negative Home Equity on Household Mobility

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  • Asaf Bernstein
  • Daan Struyven

Abstract

This paper employs Dutch administrative population data to test the "housing lock hypothesis": the conjecture that homeowners with negative home equity, low levels of financial assets, and restricted opportunities to borrow reduce their mobility. Variation in home equity driven by the timing of home purchase within a municipality and the harshness of Dutch recourse laws facilitates identification of housing lock effects. The 2SLS estimate for the effect of negative home equity is a 74–79 percent decline in mobility, where effects are substantially larger for households with low financial asset holdings or moves over longer distances.

Suggested Citation

  • Asaf Bernstein & Daan Struyven, 2022. "Housing Lock: Dutch Evidence on the Impact of Negative Home Equity on Household Mobility," American Economic Journal: Economic Policy, American Economic Association, vol. 14(3), pages 1-32, August.
    • Handle: RePEc:aea:aejpol:v:14:y:2022:i:3:p:1-32
    DOI: 10.1257/pol.20150252
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    Citations

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    Cited by:

    1. Ross M. Batzer & Jonah Coste & William M. Doerner & Michael J. Seiler, 2024. "The Lock-In Effect of Rising Mortgage Rates," FHFA Staff Working Papers 24-03, Federal Housing Finance Agency.
    2. Badarinza, Cristian & Ramadorai, Tarun & Siljander, Juhana & Tripathy, Jagdish, 2024. "Behavioral lock-in: aggregate implications of reference dependence in the housing market," Bank of England working papers 1054, Bank of England.
    3. Goehausen, Johannes & Thomsen, Stephan L., 2024. "Housing Costs, College Enrollment, and Student Mobility," IZA Discussion Papers 16726, Institute of Labor Economics (IZA).
    4. Braxton, John Carter & Chikhale, Nisha & Herkenhoff, Kyle & Phillips, Gordon, 2024. "Intergenerational Mobility and Credit," IZA Discussion Papers 16826, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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