Friday, August 7, 2009

The Value of Mobility

To those who are currently unemployed or underemployed (and this is a lot of you!), it's pretty clear just how bad this recession is. For the rest of you:

The New Joblessness (New York Times)

One point made in the article is about the value of mobility. Many of the recently unemployed have low mobility, because their mortgages are under water, and it is so difficult to sell a house anyway. Job options are thus very limited, since they can't simply uproot and move to a different state.

Growing up, we moved around a lot. Four times, my parents bought a house. Two of those times, we only lived in the house for a year before changes in employment required moving again. Each time, I think my parents had planned to stay for quite a while, but life rarely turns out as planned. One time in particular, I recall that my father's was doing contract work. His contract expired right in the middle of an employment downturn in his industry. He had difficulty finding work, compounded by the fact that we couldn't afford to move, because we'd just bought a house a few months before.

A couple of years ago, we were living in a different state. I'm very glad that we decided to rent while we were there. We could have afforded a mortgage (though, during 2006, who couldn't qualify?), but I didn't like the looks of the housing bubble. It turned out well for us, since after only a little over a year, I transferred to a different team at the company which required a move to California!

In general (though during a housing bubble all bets are off), buying a house works out better the longer you live in it before moving. Renting works out better if you move often, or can't qualify for a mortgage with a good rate.

In the current economy, I don't think it's a good idea to tie oneself down with a house, unless you are quite financially secure. The standard advice to pay at least 20% down and get a fixed-rate mortgage is coming back into style...

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