The slump in the housing market will lead to more couples breaking up. This new paper establishes that “Negative house price shocks significantly increase the risk of partnership dissolution.”
There are three possible mechanisms here:
1. A fall in house prices makes it easier to buy or rent two houses rather than one, so it becomes more feasible for couples to split up.
2. Lower prices mean less mortgage equity withdrawal, so couples who had papered over the cracks of an indifferent relationship by spending lots of money can no longer do so.
3. Couples might perceive a fall in house prices as a sign their partner isn’t the meal ticket they thought. Women might figure: “He told me we’d be living in a big house in Alderley Edge. And I’m stuck in this pokey hole.”
Does the prospect of more relationship break-ups mean the overall costs of falling house prices are greater than previously thought?
Not necessarily. Just as falling house prices are good for those who don’t own them but hope to, so increased break-ups are good for those of us not in relationships - they mean there’s more totty on the market.
Not much romance in economics, is there?
There are three possible mechanisms here:
1. A fall in house prices makes it easier to buy or rent two houses rather than one, so it becomes more feasible for couples to split up.
2. Lower prices mean less mortgage equity withdrawal, so couples who had papered over the cracks of an indifferent relationship by spending lots of money can no longer do so.
3. Couples might perceive a fall in house prices as a sign their partner isn’t the meal ticket they thought. Women might figure: “He told me we’d be living in a big house in Alderley Edge. And I’m stuck in this pokey hole.”
Does the prospect of more relationship break-ups mean the overall costs of falling house prices are greater than previously thought?
Not necessarily. Just as falling house prices are good for those who don’t own them but hope to, so increased break-ups are good for those of us not in relationships - they mean there’s more totty on the market.
Not much romance in economics, is there?
Couples breaking up is a zero sum game. There may be more totty out there, but there's more competition for it too.
For the housing market, breakups have been a major driver of housing prices, as each split creates demand for extra housing. If more splits happen, demand will rise and so will prices, so perhaps this is the mechanism that can stop a total bust in house prices.
Posted by: Marksany | September 16, 2008 at 01:34 PM
"There may be more totty out there, but there's more competition for it too."
But it's competition from losers.
Posted by: chris | September 16, 2008 at 02:07 PM
Yes Chris, but when you tell them your a Marxist, your stock price is crashing like Hbos...I would tell a nobel lie.
Posted by: passer by | September 16, 2008 at 03:08 PM
No there's no romance in economics, but it IS rather like "42"
Posted by: kinglear | September 16, 2008 at 09:22 PM
Take legal advice before deciding what to do. A lawyer or an online divorce service organization can help you understand your legal rights and responsibilities, and explain how the law applies to your case.
Posted by: Florida Online Divorce | September 17, 2008 at 06:35 AM
In order to assure surviving divorce, you should first realize that your divorce selection shouldn't be taken lightly.Opting a divorce lawyer to handle your case is a very important decision.
Posted by: Divorce Online | September 18, 2008 at 01:25 PM
In the Great Depression divorce rates dropped by 25% because people could not afford to hire lawyer. I bet you a dollar that people flock to online divorce websites in the US to get a divorce as they are over here in the UK.
Posted by: Mark Keenan | October 16, 2008 at 08:14 PM