We Can Do Better Than 12% Mobility

If regulators fail to restore rules that honor the important roles of free enterprise and private property ownership, some may be unable to climb the economic ladder.

September 18, 2012

Harry Reid, John Boehner, Herman Cain, Elizabeth Warren, Marco Rubio, Gary Locke. They’re public figures of different political stripes but with something in common: Each started out in relatively humble circumstances. All worked or had a parent who worked in some kind of janitorial occupation, and all strived for something more.

One of the great things about America is that individuals who work hard can often improve their prospects. Those who do have often needed to relocate in the process. Historically, one-fifth of the population has moved each year. But in the past 25 years, the mobility rate has steadily declined. Last year only 12 percent of the population moved, a troubling economic indicator.

Our lawmakers and policymakers in Washington should remove unnecessary barriers to economic expansion. One such barrier is the proposed bank capital standards, which are creating uncertainty among lenders and making it difficult for entrepreneurs to get funds to start businesses and buy and lease commercial real estate. Another is something most real estate practitioners can relate to: the difficulty even credit­worthy households have obtaining mortgage financing, thanks in part to proposed residential mortgage rules that are casting a pall on lending. Buying a home within one’s means and steadily paying down the mortgage is a familiar path to accumulating wealth in America.

To be sure, the pendulum swung too far the wrong way when prices were high and loans were easy for anyone to obtain. Underwriting standards should be tighter when prices are high and more accessible when prices are low. Instead, mortgage loans have become impossible for many qualified buyers to obtain because of overly restrictive underwriting standards.

Will the present state of affairs mean fewer people will ascend the economic ladder? It might, unless we convince regulators to apply capital and lending rules that honor the important roles of free enterprise and private property ownership.

Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®

Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1.3 million REALTOR® members.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them the Blue Chip Council and the Wall Street Journal Forecasting Survey. He also participates in the Industrial Economists Discussion Group at the Joint Center for Housing Studies of Harvard University. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. Dr. Yun has appeared as a guest on CSPAN’s Washington Journal and is a regular guest columnist on the Forbes website and The Hill, an “inside the beltway” publication on public affairs.

Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.