Geographical Mobility Supports Economic Recovery
According to March data, existing home prices rose sharply as Corelogic index increased by 10.5% YoY. These data shows that the ongoing housing recovery has continued with steady gains in existing home prices and has helped to support economic recovery. The fact is that the rebound in home prices has several positive effects on economy:
1/ It supports households’ wealth and therefore personal consumption expenditures which accounts for more than 70% of GDP.
2/ It helps to revive construction’s acitvity by improving the competitiveness of new homes.
3/ It allows to improve geographical mobility.
In my opinion, the last point is the most important. As a reminder, the last five years, falling home prices pushed many households in “negative equity”, owing more on their mortgages than they could raise by selling their homes. As a consequence, it reduced the ability of workers to go where the jobs were in a contexte of rising unemployment.
Fortunately, since the beginning of 2012, existing home prices have risen and have led to higher geographical mobility. According to US Census bureau, the number of people who moved last year rose to 35.6 million, pushing the overall mover rate to 12.0% (the first rise in five years) from 2011 record low of 11.6%. In these conditions, it’s easier for employers to match jobs’ seekers with available jobs, lowering the unemployment rate and supporting growth.