New York Times reporters Jennifer Medina and Sabrina Tavernise wrote yesterday of the shifting patterns of American migration. The article documents the lack of residential mobility among Americans since the beginning of the recession. There is reason to believe that some of the immobility is due to the lack of employment opportunities in traditional big city centers of commerce and industry. There is little reason for anyone to relocate in search of a job when few exist.
If the recession were to recede, and more employment opportunities return, it's likely that there would be an increase in migration, but only for the most transient of job seekers. Homeowners who are surviving by keeping their lower paying jobs will not be in a position to seek out greater opportunities in other areas for most of their remaining economic lives. That is, they will be prevented from migrating to better opportunities unless they choose to walk away from their underwater property.
The logical fallout from residential immobility is a stagnant housing industry. As long as a substantial number of homeowners can do nothing other than walk away and become renters, or stay where they are, the housing industry will be unable to participate in any economic recovery of this country. Likewise, it's difficult to expect that national economic recovery will happen without the participation of the housing industry.
The President is making it easier for somewhere around 1% of underwater homeowners to refinance their loans. Although a nice gesture, it will have no effect on the housing industry, and almost no effect on the national economy. If the President had found a way to issue an order to allow porting debt to another home, there may have been some progress made. It would give underwater homeowners one less reason to think about walking away, and it would help move the housing industry forward a little too.
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