An interesting piece from the NY Times this afternoon. Two excerpts that I would like to comment on:
The Census Bureau reported that the annual rate at which people moved dipped last year to 11.9 percent, compared with 13.2 percent in 2007 and a recent high of 20.2 percent in 1984-85. It was the lowest rate since the bureau began measuring mobility six decades ago.
The declines appeared to be directly related to the housing slump and the recession.
“It represents a perfect storm halting migration at all levels, since it involves deterrents in local housing-related moves and longer distance employment-related moves,” said William H. Frey, a demographer with the Brookings Institution.
The decline in housing prices, as well as the home ownership rate being higher than ever before, makes it less likely that people will strike out like the Joads looking for their fortune elsewhere. These individuals who currently own homes and are "underwater" would, if they were just renters, strike out to another area of the country. This isn't the case. There is a dis-incentive for these individuals who are upwardly mobile to want to take the hit that walking away from a mortgage would do to their credit score, fiscal situation, etc. It's simple cost benefit analysis. If you rent, breaking the lease is simply monetary. As a homeowner your responsibility is not just the bank, who is the de-facto landlord. It is also to the municipality which collects taxes and other assorted fees from the homeowner for the general upkeep of the neighborhood. In the situation as a homeowner, those who choose to walk away from the home come out in the negative, even if they move to a lower tax and more economically viable neighborhood. Even with the loss of money in the current home owning situation the benefit is in staying in the current situation. Essentially they are trapped.
In 2008, the bureau said, 35.2 million people changed residences, compared with 38.7 million the year before.
People who moved were more likely to be unemployed, renters, poor and black. Those surveyed listed their reasons for moving as housing, family and job, in that order.
In all, 2.2 million people moved to the suburbs last year, while the major cities lost 2 million people.
The South recorded the largest net gain of people moving in, including a large influx of blacks. While the South also drew more children than any other region, it also lost more.
The Northeast lost the most residents of any region, as it has for years, but the West also registered a decline.
Two pieces of this snippet I want to comment on here. First, the south recorded the largest percentage of people moving into the region, while we saw a decline in the Northeast as well as the west. In regards to the Northeast. Here we have a high tax, high regulation block of states which has put the stranglehold on housing(rent control, public housing, subsidized housing, thus driving up the actual cost of housing across the board)as well as business; Also the state budgets grew larger through legacy costs as well as increased welfare payments. Now, the people who are supposedly benefiting from this welfare state are, as Friedman would say, voting with their feet. Also, we see high-income earners moving from high tax states like NY and Massachusetts to lower tax states. These two classes are in essence "going Galt." The social utopia that the do-gooders have created in these states is driving those at the extremes of the income scale out of the states and putting the burden for this ever-growing government on the middle class, who are the real drivers and creators of economic growth. It will be interesting to see how all of this shakes out.