Not in my neighborhood: the effects of single-family rentals on home values

Abstract

Since the Great Recession, single-family rentals have increased as a share of the housing units within America's neighborhoods. Homeowners are concerned that this shift in housing tenure will lower their neighborhood's quality and have an adverse effect on their property values. However, no current evidence exists on whether these concerns have any validity. In this paper, we utilize a six-year balanced panel of neighborhoods from the state of Florida's metropolitan areas to study the impacts that single-family rentals have on the values of single-family homes. Our case for causality is buttressed by estimating house value models that include time and neighborhood fixed effects, treat the rentals as endogenous variables, and control for sample selection and changes in neighborhood demographics and land uses. Our results show that share increases in single-family rentals lower house values, but the effects vary between central cities and suburbs, across neighborhoods of different income levels and density, by the price of the rental unit, and whether the owner has a mailing address outside the state of Florida.