When we would drive through West Virginia back in the late 50s & early 60s, I was struck by the unemployed coal miners sitting on their porches. Their houses were quite nice, but nobody wanted to buy them because the economy was dead.
Later, my brother moved to Youngstown, Ohio after then steel mills had shut down. I remember when he called me bemoaning that a tornado missed his home by only a few hundred yards. At the time, arson was the most important industry in the town.
Theoretically, we might expect that many people would respond to unemployment by searching for better opportunities. But the steelworkers in Youngstown and the coal miners in West Virginia would take such a large capital loss in selling their homes if they chose to relocate.
Later, I read an article that seemed to validate my intuition. Read more at
http://michaelperelman.wordpress.com/2009/04/26/a-different-housing-crisis/
-- Michael Perelman Economics Department California State University Chico, CA 95929
530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com