houses are pretty illiquid assets - which means they are hard to sell quickly when you are in a financial jam. House prices are 'sticky' on the way down because sellers hate to cut the asking price in a downturn; the result is a glut of unsold properties and people who would otherwise move stuck looking at their For Sale signs. That in turn means that home ownership can tend to reduce labour mobility, thereby slowing down recovery.
In "The Ascent of Money," author Niall Ferguson discusses the challenges of owning houses, characterizing them as illiquid assets that are difficult to sell quickly in financial emergencies. This illiquidity poses a problem for homeowners who may find themselves needing to liquidate their assets rapidly, yet are unable to do so without significant losses.
Ferguson highlights the phenomenon known as "sticky" house prices, where sellers are reluctant to lower their asking prices during economic downturns. This reluctance leads to an oversupply of homes on the market, trapping potential movers and ultimately reducing labor mobility. As a result, economic recovery can be hindered, as individuals may choose to stay put rather than sell their homes and relocate for better job opportunities.
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