Underwater Homeowners May Swim Freely

Prevailing wisdom has it that homeowners who owe more on their mortgages than their houses are worth -- known as being "underwater" -- are forced to stay put because the property is too difficult to sell. So people who would otherwise relocate -- say, to find a job -- are "tethered to their homes." It's a theory touted by prominent New York Times columnist Thomas Friedman, Harvard economist Lawrence Katz, and regularly makes appearances in the media.

But according to economist Sam Schulhofer-Wohl at the Federal Reserve Bank of Minneapolis, they've all got it backwards: underwater homeowners are actually more likely to move.