I wrote yesterday’s post on housing and labor mobility before I’d had a chance to read Chris Papagianis and Reihan Salam’s excellent piece for the issue of NRODT that dropped Friday. If you needed another reason to subscribe, there it is. Their piece takes a broad look at housing policy and the role it played in the crisis. In one section, they look at the question of home ownership (or what it has become) and unemployment:

Rather than providing a social benefit, then, homeownership without equity imposes costs. Andrew Oswald of the University of Warwick has argued that such homeownership can exacerbate unemployment by making workers less likely to move from one labor market to another. Labor mobility is badly undermined when homeowners in a depressed market can’t sell their property for anything approaching the principal balance of the mortgage they originally took out to buy it.

The problem isn’t just that the unemployed can’t move out of houses they can’t afford to sell. It’s also that an employed person in a depressed area can’t move to take a better job in another city, meaning one fewer job opening in an area that desperately needs them. Current policy is making the situation worse; you’d be well advised to read Chris and Reihan’s piece, in which they lay out some smarter alternatives.