Recession forced homeowners to stay put, Cleveland economist says
More homeowners are staying in their homes longer because of the struggling economy, according to Daniel Hartley, a research economist at the Federal Reserve Bank of Cleveland. Hartley cited 2009 data from the U.S. Census Bureau that showed a steady increase in the percentage of people who live in the same house as they did a year ago, from just below 84% in 2005 up to 85.5% in 2009. The percentage of people living in a different state between the same time period decreased, from approximately 2.5% in 2005 to below 2.1% in 2009. Hartley said these correlated patterns are referred to as the "spatial lock-in" phenomenon. For example, higher foreclosures obviously make it less likely that people will be living in the same place they were a year ago. But, spatial lock-in occurs when conditions, such as unwillingness to strategically default on the mortgage or an inability to sell the home, physically prevent a homeowner from considering moving to a new location. Hartley found that, over the past decade, homeowner moving patterns — including spatial lock-in — have fluctuated simultaneously with economic stability. In 2001, the percentage of people living in the same house spiked to nearly 85% and remained at an elevated level throughout the early 2000s recession. At that time, the percentage of people who lived in a different state than they did one year ago dropped from 2.75% to 2.2% by 2003. On a local level, the recession's effect was reversed, as more people moved out of their homes in the metropolitan statistical areas with the most home price depreciation between 2007 and 2008. (The 2007 recession officially ended in June 2009, according to the National Bureau of Economic Research.) For example, the Riverside-San Bernardino metro area in California, labeled ONT for the nearest airport, Ontario, saw about a 25% drop in house prices from 2007 to 2008 and about a 2% drop in the fraction of the population that was living in the same house as it was one year earlier from 2008 to 2009. Hartley said this is most likely due to the high amount of foreclosures. Write to Christine Ricciardi.