Is High Home Ownership Rate Hurting Michigan?
From a recent CD post:
Homeownership impedes the economy’s readjustment by tying people down. From a social point of view, it’s beneficial that homeownership encourages commitment to a given town or city. But, from an economic point of view, it’s good for people to be able to leave places where there’s less work and move to places where there’s more. Homeowners are much less likely to move than renters, especially during a downturn, when they aren’t willing (or can’t afford) to sell at market prices. As a result, they often stay in towns even after the jobs leave. And reluctance to move not only keeps unemployment high in struggling areas but makes it hard for businesses elsewhere to attract the workers they need to grow.
The chart above displays the home ownership rates in Michigan and the U.S. from 1990 to 2007, showing that Michigan has historically been about 8 percentage points above the national average, currently at 68.1% for the country and 76.4% for Michigan. Only two states, West Virginia (77.6%) and Delaware (76.8%), had a higher home ownership rate in 2007 than Michigan.
Michigan has had the highest state unemployment rate in the country for at least several years - it was 8.5% in July, 0.60% higher than the next-highest state, Mississippi (7.9%).
Perhaps the high home ownership rate in Michigan, resulting from a legacy of many decades of dependable high-paying auto-related jobs, is now hindering an economic recovery here by tying workers to their Michigan home, reducing their mobility, and keeping the jobless rate high. It certainly doesn't help that home prices are falling here, which only makes the problem worse when homeowners would have to suffer a significant loss to move to another state where jobs are more plentiful.