Devalued Homes Anchor Prospective Job Seekers
With unemployment high and jobs scarce, work is hard enough to find. But in today's economy, there's an even bigger barrier for some: their home.
Many people can't afford to sell their homes; as many as one-third of homeowners owe more than their home is now worth, and there are few buyers. Americans who once expected mobility now find themselves grounded, with their careers and lives fixed in place. They can't move to better job markets without taking a huge financial hit.
Among them are Melissa Brooks and her husband. They had planned to move from Lansing, Mich., to Atlanta, to be closer to family and more available jobs. But for the past year -- even at a steep discount -- their home hasn't found a buyer.
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"Everything's kind of just centered around selling this house here in Michigan," Brooks says.
It has complicated her life. On the one hand, she has enrolled her child in school in Lansing.
But Brooks herself, a teacher, is keeping her career on hold in case they can move -- she's not looking for a job, nor is she pursuing her graduate studies. She's also kept the house on the market, which is now a short sale -- meaning it's listed for less than what they owe on the mortgage.
The experience of buying a home has scarred her, she says, and she often feels angry.
"Recently, I guess, I've been angry at the people looking to buy my home, which sounds crazy, because I want to sell the home," she says. But after renovating her 19th century home with money she'll never recover, she's appalled that prospective buyers ask her whether she plans to paint the deck or replace the wallpaper.
"I feel like, 'Don't ask me anything,' because we're short-selling this house, we're not doing anything else to it," Brooks says.
On a national level, this phenomenon is hurting the efficiency of the labor market, says real estate professor Joe Gyourko at the Wharton School at the University of Pennsylvania. With these constraints, employers and employees aren't finding their best match.
"Outside of outright foreclosure itself and the loss of wealth, it's probably the most important impact of overleveraging the housing market that we're going to have in this cycle," Gyourko says.
Some parts of the country -- namely the East and West Coast markets -- are likely to recover more quickly. But not everyone will be able to wait for home prices to recover and continue to forgo better jobs. In other words: At some point, people will abandon their houses.
"If you need a job and you need to improve your life chances, you know, why not?" Gyourko says. "I mean, it's not that it's free and it's not that it doesn't cost you, but it may be worth paying that price."
Tony Abrom has considered that.
His workplace has been downsizing, so he has been looking for work elsewhere, including out of state. Two years ago, he and his wife prepared to sell their house in Douglasville, Ga.
"We were really ready to leave," Abrom says. "We were painting the walls and everything and getting everything done, and that assessment just took the wind out of everything we were doing."
Now, Abrom can't afford to drive far from his home, but he also cannot afford to sell it.
Being stuck also forced Abrom to defer his dream of joining the Air Force, which would also require a move. And it appears he won't be free to leave for some time. "My father's buying a house four down from me -- same floor plan that I have for half the price that I paid for mine. And when I saw that, it gave me the feeling that, 'Oh my God, I'm never going to be able to get out of this neighborhood.' "
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. I'm Renee Montagne.
LINDA WERTHEIMER, host:
And I'm Linda Wertheimer.
With unemployment at close to 10 percent, work is hard enough to find. For some people, the biggest barrier to moving on to a new job is moving out of their existing home. People can't leave because they can't find a buyer or because their mortgage is underwater, meaning they owe more than their home is now worth. Historically, job opportunities have been the leading reason that people relocate. In the first of a two-part series, NPR's Yuki Noguchi looks at how the lack of mobility complicates things for people looking for jobs.
YUKI NOGUCHI: Melissa Brooks and her husband had a plan. They wanted to move from Lansing, Michigan, to Atlanta, to be closer to family and to improve their job prospects. But now, their home is standing between them and their plans.�
Ms. MELISSA BROOKS: So everything's kind of just centered on selling this house here in Michigan, and it's just it's been over a year now, and it has not happened. Not even an offer.
NOGUCHI: Brooks has kept her career on hold so she can be ready for a move. She's also kept the house on the market, which is now a short sale - meaning it's listed for less than what they still owe on it.
Ms. BROOKS: Recently, I guess I've been angry at the people looking to buy my home - which sounds crazy, because I want to sell the home. But I guess that's what I'm angry about. Now that it's priced this low, people are looking. And they're starting to ask questions like, well, what about this? Are you going to repaint the deck? And I feel like, you know, don't ask me anything, because I'm short-selling this house. We're not doing anything else to it.
NOGUCHI: She says this past year has left scars. Homeownership once seemed prudent. Now, Brooks feels frustrated and bitter.
Ms. BROOKS: I didn't expect, I guess, it to be an emotional experience to try and sell and move out of a house. But I feel like I've been burned, and I feel like, you know, I don't want to open myself up to buy another house.
NOGUCHI: Renting now seems like the far more responsible choice, so they aren't locked out of taking jobs in the future.
This is the fallout from the crash in the housing market. Americans who expected mobility, now find themselves grounded. They can't move to better job markets without taking a huge financial hit.
Real estate professor Joe Gyourko, at Wharton, says taken as a whole, this phenomenon is devastating to the labor market.
Professor JOE GYOURKO (Real estate, Wharton): Outside of outright foreclosure itself and the loss of wealth, it's probably the most important impact of overleveraging the housing market that we're going to have in this cycle.
NOGUCHI: Gyourko says some markets could take many years to recover. Some people may opt to wait it out, hoping that home prices will eventually rebound. But others may simply choose to walk away.
Prof. GYOURKO: If you need a job and you need to improve your life chances, you know, why not? I mean, It's not that it's free. It's not that it doesn't cost you, but it may be worth paying that price.
NOGUCHI: Tony Abrom has considered that.�The large telecom company he works for has been downsizing, so he has been looking for work elsewhere, including out of state. But he can't afford to drive far from his home in Douglasville, Georgia. And Abrom says it's declined so much in price he can't afford to sell it, either.
Mr. TONY ABROM: We were really ready to leave. We were painting the walls and everything and getting everything done, and that assessment just took the wind out of everything we were doing.
NOGUCHI: Abrom wanted to join the Air Force, but moving for that is also out of the question. So it appears he'll be stuck for some time.
Mr. ABROM: My father's buying a house four houses down from me, same floor plan that I have, for half the price that I paid for mine. And when I saw that, it gives me that feeling of, oh my God, I'm never going to be able to get out of this neighborhood.
NOGUCHI: Abrom hopes things won't get worse. He's willing to put his career on hold for another two or three more years, and hope for the best.
Yuki Noguchi, NPR News.
WERTHEIMER: Visit npr.org to see a map that has state-by-state information on underwater mortgages. And if you're trying to sell a house, we would like to hear how that's going. Transcript provided by NPR, Copyright NPR.