tskeeter
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Post by tskeeter on Nov 1, 2013 15:20:43 GMT -5
A study by British economists found that high levels of home ownership correlate with high levels of unemployment. money.msn.com/home-loans/news.aspx?feed=OBR&date=20131101&id=17061257The study findings show that when home ownership doubles, the unemployment level more than doubles. Why? Home owners are less likely to relocate to where the work is. Especially if their home is under water. The anchor of home ownership causes job seekers to turn down jobs because the commute from their home to the job is too long. And, home owners have a NIMBY (not in my back yard) attitude about businesses entering their neighborhood. Businesses that could provide jobs. So, government programs that promote home ownership, such as mortgage interest deductions, loan subsidy programs, and the variety of homeowner assistance programs that have appeared since the economic collapse in 2008, probably have the unnitended consequence of creating unemployment and the realted economic instability that large scale of unemployement causes, arther than actualy promoting economic stability, as is intended by such programs.
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HoneyBBQ
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Post by HoneyBBQ on Nov 1, 2013 15:43:58 GMT -5
Correlation, not causation! UGH!
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tskeeter
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Post by tskeeter on Nov 1, 2013 15:50:52 GMT -5
Correlation, not causation! UGH! Yeah, I spent enough time in statistics classes to understand that correlation does not absolutely translate into a causal relationship. However, if you look at the explanations, it is easy for even a lay person to conclude that there is a very high probability that the anchor of owning a home may discourage unemployed home owners from taking the actions necessary to obtain employment.
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cronewitch
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Post by cronewitch on Nov 1, 2013 15:51:41 GMT -5
True I won't relocate to take a job. I won't even look more than a decent commute and might turn down a job even after applying. I love software support and applied to a company that I know the software. It is on the other side of down town then still a long drive. I considered taking the bus but after work would need to walk almost a mile after dark to catch a bus down town to transfer. So gas was too much, bus miserable and I am not selling my house.
I bet the next thing they will say is being with someone like a spouse hurts employment. Now my house is between our job so if I had moved for work his commute would have been impossible.
Foot loose people can go where the work is, so single living with parents can go to the job. Married, house, children in school, spouse with good job will turn down bad offers.
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tskeeter
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Post by tskeeter on Nov 1, 2013 16:03:54 GMT -5
True I won't relocate to take a job. I won't even look more than a decent commute and might turn down a job even after applying. I love software support and applied to a company that I know the software. It is on the other side of down town then still a long drive. I considered taking the bus but after work would need to walk almost a mile after dark to catch a bus down town to transfer. So gas was too much, bus miserable and I am not selling my house. I bet the next thing they will say is being with someone like a spouse hurts employment. Now my house is between our job so if I had moved for work his commute would have been impossible. Foot loose people can go where the work is, so single living with parents can go to the job. Married, house, children in school, spouse with good job will turn down bad offers. All of the comments in your last couple of sentences are very valid, Crone. All of those factors prevent certain people from pursuing employment opportunites. Even when the opportunity might be a promotion. I've seen several coworkers turn down promotions, or opportunities that would have led to a promotion, because the additional compensation wouldn't replace the income lost when a working spouse had to change jobs due to a relocating spouse. In a case where our group headquarters was being moved, refusal to relocate meant that one of the spouses lost their job. So, it was a question of which spouse was going to be unemployed. If the income of both spouses is pretty comparable, it becomes a coin toss about which of the jobs a couple is going to give up.
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HoneyBBQ
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Post by HoneyBBQ on Nov 1, 2013 16:21:57 GMT -5
Correlation, not causation! UGH! Yeah, I spent enough time in statistics classes to understand that correlation does not absolutely translate into a causal relationship. However, if you look at the explanations, it is easy for even a lay person to conclude that there is a very high probability that the anchor of owning a home may discourage unemployed home owners from taking the actions necessary to obtain employment. Sorry didn't mean to come off snarky. I realize I did though. Sorry
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Post by The Walk of the Penguin Mich on Nov 1, 2013 16:23:45 GMT -5
Correlation, not causation! UGH! I wonder why people cannot discern the difference between correlation and causation? This drives me NUTS! Despite the plausible reasons that the article states, I wonder if they considered marriage as a confounder and controlled for it? They could equally say that those with a house are more likely to be married, and their spouse either doesn't want to move due to family or employment.
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Deleted
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Post by Deleted on Nov 1, 2013 16:40:17 GMT -5
Actually, it's not so much a coin toss as it is a reason to examine other peripheral factors. For example, a major factor for most people is the commute. A 70-mile/70-minute each way commute, twice a day, five days per week, becomes 700+ minutes spent traveling every week... 11hours and 40+ minutes traveling on top of the time spent actually at the job. That's in addition to the cost of of driving 700 miles per week, which, at 25 mpg (YMMV), means 28 to 30 gallons. If gas sells for $3.75 p/gal, 30 X $3.75 = $112.75 for gas every week.(nearly $6,000 per year)
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Shooby
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Post by Shooby on Nov 1, 2013 16:44:23 GMT -5
It is just all part of the further erosion of family and community. And, this is just another nail in the coffin.
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Angel!
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Post by Angel! on Nov 1, 2013 16:51:15 GMT -5
It is just all part of the further erosion of family and community. And, this is just another nail in the coffin. I don't understand the connection at all.
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Deleted
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Post by Deleted on Nov 1, 2013 17:28:27 GMT -5
Pffffff! Just buy another house closer to the new job. Rent the old one out. Do that a couple of times and the spouse has a built-in job.
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Deleted
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Post by Deleted on Nov 1, 2013 17:33:49 GMT -5
You must be a rich dad LOL, do you know I've never read ANY of his books. I don't think I could tolerate the attitude.
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Opti
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Post by Opti on Nov 1, 2013 18:08:22 GMT -5
"Yeah, I spent enough time in statistics classes to understand that correlation does not absolutely translate into a causal relationship. However, if you look at the explanations, it is easy for even a lay person to conclude that there is a very high probability that the anchor of owning a home may discourage unemployed home owners from taking the actions necessary to obtain employment.
"
As a person who was affected by this current round of low employment/high layoffs versus the last one that was almost as bad, the early 1980s, my guess is you and the article writer are missing lots and lots of other factors. The programs in 2008 etc. were pushed to bolster the housing market. Actual numbers of people owning homes has plummeted since probably 2006/2007 in spite of these programs.
Plus, if you own any asset and it loses value you are less inclined to sell it. This is the situation most people found themselves in not just homeowners. Moving costs money and I know quite a few older single folk who rent who don't want to move to jobs just to get their asses laid off in two months to a years time. Homeownership didn't cause corporations to outsource jobs out of the country. Homeownership didn't cause the credit debacle. The home bubble was caused by the engineers of the credit crash not the other way round. Plus many jobs and disciplines pay less than they did in 2007. Its hard to want to leave everything you know to go to be paid less and have no social supports. It has been proven a social network helps keep people healthy.
High homeownership had no effect on the continuing global nature of the job market which has decimated the middle class job market here and in many formerly well-paying countries. Way too many factors to play the causation game, because how does too many people owning homes influence say Merck to lay people off? (My understanding as of yesterday is they are laying off thousands of people in the near future FWIW.)
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tskeeter
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Post by tskeeter on Nov 1, 2013 18:12:15 GMT -5
Correlation, not causation! UGH! I wonder why people cannot discern the difference between correlation and causation? This drives me NUTS! Despite the plausible reasons that the article states, I wonder if they considered marriage as a confounder and controlled for it? They could equally say that those with a house are more likely to be married, and their spouse either doesn't want to move due to family or employment. Mich, I think that the comparison between countries would control for maritial status. Specifically, the comparison of Spanish and Swiss homeownership/employment levels discussed in the article. I wouldn't expect to see as dramatic difference in maritial status as the researchers found in other metrics. But, I agree with your suggestion that there are other factors, beside home ownership, that affect a particular individual's willingness to relocate to obtain employment. Unless the researchers specifically wanted to distort their results, I'd think that they would have used large enough sample sizes to largely normalize for the other factors that could influence their study.
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tskeeter
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Post by tskeeter on Nov 1, 2013 18:22:35 GMT -5
Homeownership didn't cause the credit debacle.
Actually, I'd disagree with this statement. The event that was the genesis of the fundamental changes to the home financing process and which ultimately led to inadequately securitized mortgage backed financial derivatives and over leveraged financial institutions was Bill Clinton's requirement that mortgage lenders lend money in communities where most residents did not have the wherewithall to make mortgage payments. The push for higher levels of home ownership in poor, typically renter communities, was the starting point for the debacle that became a credit crisis.
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Opti
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Post by Opti on Nov 1, 2013 18:34:43 GMT -5
en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate4 Singapore 90.1 2012[7] 5 China 90 2012[8] 16 Israel 71 2002 17 Australia 69 2002 17 United Kingdom 69 2002 18 Canada 68.4 2006[17] 19 Finland 67 2000 20 United States 65.4 2012[18][19] 21 New Zealand 65 2004[20] Percentage of homeowners follows the country name. Year is year of the data. Quick, we need to short sell China and Singapore. They are doomed. At least according to the article which admits its just a theory at this point.
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Opti
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Post by Opti on Nov 1, 2013 18:39:44 GMT -5
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haapai
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Post by haapai on Nov 1, 2013 18:56:01 GMT -5
I've heard bits of this theory before. You'll find pockets of surprisingly high unemployment in areas where a specialized industry had previously supported a lot of homeownership.
There's a famous example somewhere in Pennsylvania where a geographical feature made it the ideal place to do a certain type of repair to railroad stock. Lots of highly specialized workmen did pretty well for a couple of decades and when that work was eliminated, very few left. High levels of unemployment persisted for decades.
It was explained to me as a fluke that occurred only when a lot of specialized jobs disappeared quickly and the house market absolutely crashed.
Maybe it's a stronger tendency then we realize, but I'm wary of extrapolating from European studies. Land and housing are incredibly expensive there and their bankruptcy and lending practices are quite different.
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Shooby
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Post by Shooby on Nov 1, 2013 19:29:23 GMT -5
It is just all part of the further erosion of family and community. And, this is just another nail in the coffin. I don't understand the connection at all. You don't?
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Sum Dum Gai
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Post by Sum Dum Gai on Nov 1, 2013 19:29:44 GMT -5
For 6 months to a year maybe. Then the bank takes your house because you're behind on the mortgage, and you're free to go where the jobs are.
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marvholly
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Post by marvholly on Nov 2, 2013 6:00:41 GMT -5
I would NOT relocate for a job and it is NOT because I own a home.
ALL my family (kids & grands) support people are here. When I was younger I woud not have because even more support people and my parent were local.
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Deleted
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Post by Deleted on Nov 2, 2013 6:49:53 GMT -5
Homeownership didn't cause the credit debacle. Actually, I'd disagree with this statement. The event that was the genesis of the fundamental changes to the home financing process and which ultimately led to inadequately securitized mortgage backed financial derivatives and over leveraged financial institutions was Bill Clinton's requirement that mortgage lenders lend money in communities where most residents did not have the wherewithall to make mortgage payments. The push for higher levels of home ownership in poor, typically renter communities, was the starting point for the debacle that became a credit crisis. It isn't that they couldn't afford mortgage payments. It's that they couldn't afford 100% loans on houses they somehow qualified for....
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Deleted
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Post by Deleted on Nov 2, 2013 8:11:33 GMT -5
For 6 months to a year maybe. Then the bank takes your house because you're behind on the mortgage, and you're free to go where the jobs are. Except that if you apply to a place that checks credit ratings you're going to have a very hard time. I'm sure that a lot of people were stuck in houses with underwater mortgages when they would have liked to pick up and move to a place with more opportunities. The sad part was that you could have gotten a mortgage within your means and you could have been paying it on time every month, but when the neighbors started putting their homes on the market at distress sale prices the value of yours went down, too. I've owned real estate since I was 25. I broke even on my first place, did extremely well on the second and third houses, and the value of this one is maybe 15% above what we paid for it 10 years ago. Home ownership is good for stabilizing neighborhoods and maybe having a place you own outright at retirement, but it has its risks.
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busymom
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Post by busymom on Nov 2, 2013 9:37:43 GMT -5
The reason I'm staying put, for now, has nothing to do with a job. I am overseeing, & providing some care for my Mom & another relative. If I moved out of state, I'd have to rely on "the system" to meet their needs. Not happening.
I wish these studies would have more depth in finding out why people stay put. It's not "one size fits all".
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Deleted
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Post by Deleted on Nov 2, 2013 15:09:13 GMT -5
Leases discourage mobility too. We should get rid of home ownership and leases and everyone can go month to month! In fact, this would all be even easier if the government just provided all housing for a single set price. This way the COL of an area would no longer be a barrier!
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tskeeter
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Post by tskeeter on Nov 4, 2013 12:04:06 GMT -5
The reason I'm staying put, for now, has nothing to do with a job. I am overseeing, & providing some care for my Mom & another relative. If I moved out of state, I'd have to rely on "the system" to meet their needs. Not happening. I wish these studies would have more depth in finding out why people stay put. It's not "one size fits all". The study doesn't imply that home ownership is the only impediment to people moving to where the jobs are. Just that high levels of unemployment and high levels of home ownership seemed to go hand-in-hand. At least that's the conclusion of this study's authors. (See statistics provided in post above that may lead you to a different conclusion.)
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