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Kirsty Morbey discusses the effect of the Real Estate recession upon divorce in America

According to the Great Recession and Marriage survey published recently in the American Economic Review, 40% of couples considering separation put their plans on hold when the recession hit.

There were seen to be 2 basic reasons for this decision:

  1. 29% said that the recession had made them more aware of the family ties that bind and that families should stick together in tough times.
  2. The rest were less interested in divorce as they were worried about the value of their home and how they would pay for lawyers and two households.

The study in fact found a direct link between decreasing house prices and divorce. For example, a 10% decrease in home prices would lead to a 21.5% decrease in divorce. This is backed up by actual figures – in 2007 home values declined by 30% and the divorce rate fell by 4% nationally. Basically, unemployment, reduced income and trouble paying the household bills meant that divorce wasn’t worth the money that would need to be spent on the fees to divorce.

The trend is illustrated by one example when a Court ordered Chana Taub to share her New York home with her estranged husband. He was allowed to move back in and they divided their 3 storey pad to give them a floor and a half each, with barricades dividing a second floor door! The couple are still living like this 6 years on, but have recently been ordered by the Court to sell up all their properties and divide the reduced profits.

Over the last 4 years I have come across this problem on many occasions. Basically, a couple want to separate, but an actual physical separation is impossible, as neither can afford to move out and still keep the family home afloat. This means them having to remain under the same roof for an indefinite period, until the home can be sold. I would imagine that many of my former clients would have been somewhat grateful to have the luxury of a 3 storey New York property to divide and would not have grumbled at having to live on only one and a half floors!

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