Analyses of the housing bubble have looked at homeowners' race and ethnicity, age, income, and other standard demographic variables as factors that contributed to the boom and bust in home prices. Giving a dirt-poor Mexican strawberry picker a loan for a million-dollar home? Probably not going to ever get that back.
And yet all these studies ignore the major trend in living patterns over the same period — being a transplant. It's a phenomenon that everyone knows about, and which is confirmed by the data on migration between one's birth state and current state. But since most of the folks who think about these big problems are transplants themselves, they are prevented by cognitive dissonance from exploring the destabilizing effects of migration.
The General Social Survey asks respondents if they own or rent the place where they live. It also asks what Census region they were living in at age 16, and where they are living currently. I made a transplant variable that simply spots any difference between the region where they grew up and where they're living now. Note that this definition of "transplant" is not merely someone from the 'burbs moving to the nearest city, but someone who hails from a completely different region of the country — say, raised in New England but living along the Pacific.
I've restricted the respondents to whites only, since we already know about the outsized role that Hispanics and especially immigrant Hispanics played. If there were only a racial / ethnic angle, studying natives vs. transplants among whites shouldn't show much of a difference. If on the other hand Hispanic immigrants were just a special case of a more general pattern about transplants, then we'll see something after all looking just at whites.
I re-ran the comparisons looking only at native-born whites, and native-born non-Hispanic whites, and the conclusion did not change. So I'm only narrowing it down to just "whites" to keep sample sizes as large as possible.
First, the homeownership rates for regional natives vs. transplants, surveying the nation as a whole (natives in blue, transplants in orange):
The long-term baseline for regional natives seems to be about 70%, and about 63% for transplants, a rate that is 10% lower. This shows that transplants are not just switching regions and then planning to stay put in their adoptive region. Mostly they are, but they're more likely than natives to only be renting — just in case they have to bail and switch locations again.
At any rate, the data for the natives shows only one survey year of dramatic rise in homeownership — 2006 — and a pretty quick return to the baseline by 2010. The burst went from 72% to 80%, or an 11% jump. The boom-and-bust cycle is evident, but not very extreme.
The case of transplants, however, could not be more dramatic. Their burst shows up already by the 2004 survey, and does not return to baseline until 2014. Their boom lasted far longer than for natives, indeed the better part of a decade. Moreover, it was a wilder departure from the historical norm — soaring from about 64% to 80%, or a 25% jump. So the sudden burst for transplants was more than twice as great as it was for natives.
Now let's zoom in on the most heavily inflated and then heavily devastated region, the Pacific (the vertical scale is now twice is big as before):
Overall natives and transplants out West have closer rates of homeownership than back East. And it's not because of higher rates out West among transplants, but much lower rates out West among natives. It's one of the few places where natives and transplants are equally, and minimally, invested in continuing to live in their region. "San Francisco, Portland, and Seattle: Even our natives are fickle."
In any case, the boom and early bust were not so different between natives and transplants out West, although the decline has been much steeper among transplants. The major difference are the beginning and end points of the entire data series: transplants in 1985 had homeownership rates just above 40%, and despite a long detour toward 75%, they are now right back to where their counterparts started 30 years ago.
Of course, out West the white transplants played less of a role because there were hordes of Mexican transplants eager to take the unpayable mortgages that Americans just wouldn't take.
The upshot is that the housing bubble was primarily a transplant phenomenon. Natives to a region experienced a much shorter and smaller increase in homeownership rates. The ludicrous boom and bust activity was driven by transplants to a region — Mexicans out West where there were plenty nearby, or white transplants in the rest of the country where there were few Mexicans.
I don't read much economic literature, but judging from what I've been exposed to over the past seven years on the internet, this is the first look into homeownership rates over time for natives vs. transplants to a region, and the first to lay the blame more on migration in general for the effects of rootless boom-towns.
This doesn't explain why transplants were more susceptible to the boom-and-bust cycle, but it's easy to see some of the reasons. They're more likely to be strivers, for one thing, hence more willing to jump on a bandwagon.
Their main weakness in my view, though, is their ignorance of local conditions and their history. I remember right at the peak of the housing bubble, my mother said she couldn't believe how high the home prices were getting in her neighborhood, and that she didn't believe the homes were really worth that much. By that point, she'd been living there for nearly 15 years and had a long-enough history of impressions to judge from, even if she lacked a rigorous time series of real estate data.
A couple from outside the region who bought a home just across the street from her in 2007, on the other hand, didn't arrive with any lasting memories for an intuition to emerge from. As far as they knew, it was just the price of moving into that neighborhood — maybe a little high historically, but nothing really weird, and hey, maybe the neighborhood had been under-valued before, and the transplants like them were simply revealing what it was truly worth.
Sadly, they will never get out of the house what they paid for it. They would probably lose around $70-80,000 if they sold and moved, and that's with home prices having recovered and gone up somewhat since the nadir of the early 2010s.
Let that be a cautionary tale about the value of knowing a place like the back of your hand. The footloose gold-rush lifestyle will pay well for a tiny handful of lucky ones, but it will ruin most of the strivers, who simply do not know what they're getting into.
GSS variables: dwelown, year, regtrans, region, reg16, race, hispanic