The hallmark of the American labor market, and consequently the wider economy, has long been the mobility of our work force.

From “going West” to “teleworking,” we go where the jobs are.

Unfortunately the uniquely disastrous state of the current housing market is changing all that.

One in four homeowners with a mortgage are now “underwater” on that mortgage; their home is worth less than their debt.

“Mobility deteriorates when you’re under water because you can’t get out from under the house without bringing money to the table,” says Mark Fleming, chief economist at CoreLogic. “So, it reduces mobility, which has an impact on the labor markets and the efficiency of labor markets in terms of people finding new jobs and people moving to where the jobs are located.”

Some borrowers, in good markets, can afford to rent out their homes and move to the new location. If the rent covers the mortgage payment, they can afford it, and many are doing just that. The trouble is, the bulk of those looking for new jobs are unemployed and likely behind on their mortgage payments already. For them, renting is probably not an option. Their last resort would be a short sale, where they negotiate with the bank to let them sell for less than the value of the loan, with the bank taking the hit.

That’s not as easy as it sounds.

Page 1 of 2 | Next Page
Show Entire Article

‘Sugar High That Has Buoyed US Economy Is Wearing Out’

El-Erian: Why Fed Is Unlikely to Have Third Round of Easing

Economy Falters, Stocks Tank: What’s an Investor to Do?

Bonds Rise on Weak Data; 10-Year Yield Below 3%

Mortgages Still Cloud Bank of America Outlook: CEO

More Top Stories

Article source: http://www.cnbc.com/id/43238517?__source=RSS*blog*&par=RSS