One of the biggest obstacles to improvements in the US job market since the Great Recession struck has been the fact that many Americans were stuck geographically, weighed down by an inability to sell houses that were “underwater”—that is, worth less than the mortgage on them.
That effects the efficiency of the economy. Put simply, a car mechanic with a family and an underwater house in Schenectady, New York is going to have a tough time getting one of the plentiful jobs in the North Dakota gas fields, even if his skills are somewhat transferable, because he can’t move his family. But that’s changing. You can see from this chart, which we plucked from a recent New York Fed report, that the share of underwater mortgages has come down from the high tide seen during the recession.
And a recent update from demographer William Frey at the Brookings Institution suggests that healing in the housing market is helping to ease such “frictions” in the US jobs market. His analysis of the latest migration data published by the US Census shows that people are starting to return to the pattern that prevailed before the Great Recession struck, leaving slow-growth northeastern and Rust Belt regions for faster-growth southern and Sun Belt climes. Here’s the story, told through a chart:
As we’ve told you again and again and again, do not underestimate the import of the US housing recovery. It got the US into its recent mess, and now it looks like it’s helping to get it out. But we’ll have to wait for the US jobs report this Friday, April 5, for the hard numbers on March.