Monday, December 29, 2008

Divorce and real estate prices

There's nothing like the holidays to accelerate news coverage of divorce! Today it's not celebrity divorce, although apparently J.Lo has something up her sleeve on that front. Rather, the Times reports that divorces are being turned upside-down by the decline in real estate prices.

With huge capital losses on real estate, some couples may find the net economic gains to divorcing have evaporated. These couples must be expecting their assets to rebound in value, of course, or else they feel liquidity constrained. Otherwise, why wait? Presumably labor productivity is if anything lower in a doomed marriage!