Randomized trial shows home equity erosion reduces household mobility in homeowners, implying tax structures influence housing decisions.
• Home equity erosion causally reduces household mobility even without negative equity. • The Tax Reform Act 1986’s mortgage-only tax shield identifies higher mortgage demand. • Exclusive mortgage deduction inflated mortgage by $7,600, squeezing equity by 8.2%. • The equity erosion reduced homeowner mobility by 3.8%. • Renter mobility remained unchanged, validating the mortgage-specific variation.
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Manish Gupta (2026) studied this question.
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