Rental Housing Market Research Articles

Home-ownership and the Labour Market: Evidence from Rental Housing Market Deregulation

Perhaps the most common finding relating housing to the labour market is that high home-ownership rates are associated with higher unemployment. In contrast, recent micro-evidence suggests that home-owners have relatively favourable labour market outcomes. We explore the effect of home-ownership on unemployment exploiting a rental housing market deregulation reform which created exogenous variation in home-ownership across regions, allowing us to avoid the endogeneity problem in earlier studies. While home-owners are less likely to experience unemployment, an increase in the home-ownership rate causes unemployment to rise. Externalities arising from consumption reductions and increased job competition may explain the conflicting evidence.

Tracking mobility in the housing choice voucher program: a household level examination in Florida, USA

Previous research on the housing choice voucher (HCV) program has focused on neighbourhoods where voucher holders reside at one point of time. Little is known about mobility of voucher households during their tenure in the program. Using an administrative dataset that spans 11 years for the state of Florida, this study evaluates how often voucher households move and their mobility outcomes, measured by the change of neighbourhood poverty. Findings reveal that HCV households moved frequently beginning in the early years of program participation. Between 2007 and 2013 there was a notable decrease of voucher presence in high-poverty areas. Regression analysis further suggests that rental housing market conditions are significantly associated with mobility outcomes. White, non-Hispanic households and those with higher incomes were more likely to move to lower poverty neighbourhoods, whereas disabled and formerly homeless households moved more frequently and were not as successful in accessing lower poverty areas.

A legal perspective of current challenges of the Spanish residential rental market

PurposeThis paper aims to explain the main difficulties in the Spanish residential rental market becoming a true alternative to home ownership.Design/methodology/approachCurrently, the Spanish rental market only meets temporary housing needs; it is very atomized and lacks professionalism. It does not provide an adequate legal framework to fulfil the parties’ aspirations (i.e. stability, affordability and flexibility for tenants; profitability, security and guarantees to landlords). The analysis of this proposition and the resulting proposal are based on six years of research, which started with the TENLAW European project.FindingsOvercoming these constrains is essential to double the rate of residential leases in Spain and get closer to the European average, thus achieving a true diversification of housing tenures and avoiding future housing bubbles.Practical implicationsThe paper makes a series of recommendations to legislators and policymakers to draft an adequate legal framework aimed at increasing the housing rental market share. This is based on the experience of mature tenancy markets in Europe, such as the German, Swiss and Austrian ones.Social implicationsThe new proposed legal framework will help to transform the tenancy model in Spain into a functional one, making it more stable, affordable and flexible, while increasing safety and profitability for landlords. The model is also applicable, on a more general level, to all Mediterranean European countries.Originality/valueRethinking the regulation of tenancies, in a context of housing crisis and unaffordability (still a reality in many European and worldwide countries) has valuable potential for making this type of tenure more popular and for avoiding future housing bubbles.

The securitization of residential rental revenue streams in Europe

PurposeThe purpose of this paper is to analyze the securitization of rental streams, a new investment and finance product introduced in the USA in 2013 that enables fundraising from large residential portfolios owned by major investment funds and investment banking. The securities are made up of non-performance loans as well as real estate portfolios of financial entities.Design/methodology/approachAn academic analysis of the European securitization market is performed, as well as a broad overview of the state of the art of the rental housing market and investment property market. Moreover, a market study of Real Estate Owned (hereinafter, REOs) and Real Estate Debts is carried out to determine both the present framework and future trends. Various financial entities and real estate management companies are examined through interviews and data collection to assess the reality of distressed assets and residential portfolios owned by major investors. It introduced the Broker’s Price Opinion concept, de loan-to-value concept and the London Interbank Offered Rate.FindingsREO-to-rental securitization is a step forward toward the democratization of finance through the globalization of the residential market, improving risk sharing for major and retail investors. The securitization of rental streams in Europe has not taken off, despite several issuances in the USA since 2013 with significant success where first tranches obtained a credit qualification of triple-A from the majority of the main rating agencies.Originality/valueAt the end of 2013, a global investment firm launched an innovative finance and investment vehicle that securitized the cash flows originating from leased residential properties. That issue resulted in considerable success and in the development of a new alternative and innovative financing source for real estate activity. Taking into account that housing is a primary need of our society, there is a strong motivation for improving the residential market, and thus, REO-to-rental securitization could help take a step forward in making the housing market more efficient.

Tenant Protection, Temporal Vacancy and Frequent Reconstruction in the Rental Housing Market

AbstractIn Japan, tenants are protected in the sense that owners must compensate them for evicting them against their will, while owners cannot foresee the intended tenure length of prospective tenants. If owners cannot specify the term of a lease, social inefficiency emerges: (i) detached houses owned by individual households remain vacant for a certain period; (ii) alternatively, landlords’ newly constructed apartments, which are free from eviction risk, accommodate a large proportion of tenants; and (iii) the apartments are rebuilt frequently even though they remain viable. If a fixed‐term contract is available, only short‐term tenants choose it, and the information asymmetry is dissolved, realizing social efficiency.

A Theory of Sticky Rents: Search and Bargaining with Incomplete Information

The housing rental market offers a unique laboratory for studying price stickiness. This paper is motivated by two facts: 1. Tenants’ rents are remarkably sticky even though regular and expected recontracting would, by itself, suggest substantial rent flexibility. 2. Rent stickiness varies significantly across structure type; for example, detached unit rents are far stickier than large apartment unit rents. We offer the first theoretical explanation of rent stickiness that is consistent with these facts. In this theory, search and bargaining with incomplete information generates stickiness in the absence of menu costs or other commonly used modeling assumptions. Tenants’ valuations of their units, and whether they are considering other units, are both private information. At lease end, the behavior of risk-averse landlords differs according to the number of units managed. Multi-unit landlords, aided by the law of large numbers, exploit tenant moving costs. When renegotiating rent contracts, they set rent increases that exceed the inflation rate; while the majority of tenants stay, those who place low value on the unit search elsewhere and leave. Landlords with one unit loathe vacancy and offer tenants the identical contract to pre-empt search; only those who really hate the unit leave.

Settlement and housing experiences of recent immigrants in small- and mid-sized cities in the interior of British Columbia (Canada)

Relatively little is known about immigrants’ settlement experiences in small- and mid-sized Canadian cities, including their access to local services and their housing experiences and outcomes—both of which are key factors in successful integration. This study considered immigrants’ settlement experiences, including their access to local services and their housing experiences and outcomes, in the cities of Kelowna and Kamloops, with a focus on the housing rental market, and reliance on community services. The results of the study include recommendations for improving immigrants’ settlement and integration in urban areas in the interior of British Columbia. Survey data were gathered between April and August 2015 from 80 recent immigrant renters in the cities of Kelowna (40) and in Kamloops (40). Findings suggest that immigrants find their housing more difficult than anticipated, largely due to unexpectedly high costs and unfamiliarity with the Canadian housing system. Few immigrants in either city relied on local community organizations or government-sponsored ones to find a place to live and/or a job upon arrival in Kelowna or Kamloops, although those who did found them very helpful. Immigrants relied mostly on their family and friends for initial assistance, but would have preferred to have received more information prior to or on their arrival. They recommended that settlement and housing services offer more direct assistance to new immigrants. For policies to succeed in attracting and retaining immigrants to these cities in British Columbia’s interior depends on the presence of (a) more subsidized/affordable housing; (b) job opportunities that match immigrants’ qualifications and that offer an adequate income; and (c) quality services and programs to integrate new immigrants into the community.

Contexts and conditions of ethnic discrimination: Evidence from a field experiment in a German housing market

People's housing conditions and places of residence have serious impacts on individual well-being and social stratification. This article focuses on different forms of ethnic discrimination in the rental housing market. Several hypotheses on statistical discrimination, spatial steering, and discrimination by price were tested by a field experiment in Germany that was unique regarding both the amount of information available on rental units and on ethnic composition of neighborhoods. For 637 rental objects, two e-mail inquiries were sent out with applicants having German or Turkish names and varying occupations. Logistic random intercept regressions revealed a discrimination rate against Turkish applicants of 9 percentage points. Indicating a high occupational status in the application reduced this discrimination rate significantly, but private landlords tended to disregard status and discriminate by migration background only. Surprisingly, the discrimination against Turkish applicants was the strongest when the proportion of Turkish residents living in the neighborhood was highest. German applicants were particularly favored over Turks when making applications for reasonably priced objects. These results point to both core mechanisms driving discrimination (preference and information) being relevant, but in different market segments.

Homeownership rates of financially constrained households

PurposeThis paper aims to examine tenure choice in the Swedish housing market with explicit consideration of households’ credit constraints in combination with age and ethnic background.Design/methodology/approachObservations of some 940,000 households were used to analyse the Stockholm housing market in 2008, prior to the implementation of the mortgage cap. The tenure choice models were estimated using a two-stage instrument variable (IV) logit and probit model with ownership or renting as outcome.FindingsThe results suggest, as expected, that being financially restricted is negatively related to owning. In particular, financial restriction is more binding for young households and households with a foreign background than for other types of households. These two sub-groups are also known to have difficulties establishing themselves in the rental housing market, and are therefore specifically vulnerable to further financial constraints such as borrowing restrictions or amortization requirements.Originality/valueThe government in Sweden has become concerned with the rapid growth in household indebtedness. As a response, a 0.85 loan-to-value ratio mortgage cap was introduced in 2010. However, critics are concerned with the effects this may have on the possibility for certain households to purchase a dwelling.

A comparative analysis of experience in the development of rental housing markets in countries with a large share of home ownership

The article analyzed the state policy for the development of rental housing. Countries were selected according to the following criterion: with a large share of housing in the property. The policy on the development of rental housing in the following countries is analyzed: Russia, Lithuania, Estonia, Bulgaria, Slovakia, Romania, Spain. Despite the statements of politicians in these countries about the interest in a civilized approach to the rental market, state projects are mostly experimental in nature and the share of investments in building social housing is very small. In a number of countries, attempts have been made to form long-term holistic concepts for the development of the rental housing market.

Discrimination Against Families with Children in Rental Housing Markets: Findings of the Pilot Study

This pilot study adapted a well-established paired-testing methodology to examine discrimination against families with children in the rental housing market, developed preliminary estimates of this form of discrimination, and explored what family or housing characteristics might affect it. Data were collected via telephone and in-person paired tests in three metropolitan sites: Dallas, Texas; Dayton, Ohio; and Los Angeles, California. The pilot study relied on a multifactor design using data from 612 matched pairs of rental applicants. Key findings are that homeseekers with or without children are equally likely to get an appointment with a rental agent and learn about at least one available housing unit. Compared with their childless counterparts, prospective renters with children were shown slightly fewer units and were told about units that were slightly larger, and, as a result, were slightly more expensive to rent. Other outcomes did not vary by the presence of a child. Differential treatment was greater in tests targeting one-bedroom units (versus larger units) and tests involving two-child families (versus one-child families). Other factors, including race/ethnicity and marital status of the tester and ages and sexes of the children, did not appear to affect systematically how families with children were treated in the rental housing market.

Future Directions for Research on Discrimination Against Families with Children in Rental Housing Markets

The essay Future Directions for Research argues that the results of the HDS-Families pilot study — and those of the most recent national paired-testing study of discrimination against minority homeseekers — suggest that protected classes of homeseekers are no longer blatantly denied access to available housing. Many fair housing advocates and practitioners suggest that discrimination today may take different forms or may occur at different stages in the homeseeking process. If so, effectively measuring the incidence of discrimination in 21st century housing markets may require alternative research strategies. This essay discusses possible adaptations to paired-testing study design; an analysis of local occupancy standards and how they are applied by housing providers; exploratory analyses of discrimination at later stages of renting; interviews of housing providers to understand their knowledge, attitudes, and practices; and a large-scale survey of renters.

What Explains the Differential Treatment of Renters Based on Ethnicity? New Evidence From Sydney

This article conducts the first contextual analysis of ethnic-based discrimination in an Australian rental housing market: metropolitan Sydney. Logistic regression is employed to investigate how the likelihood of five behaviors by rental agents that may favor Anglo home seekers varies according to characteristics of the agent, home seeker, dwelling, and neighborhood. We find that several forms of discrimination favoring Anglos are consistently more likely in neighborhoods characterized by lower crime rates and shares of renter households, regardless of the ethnicity of the agent. Other patterns are consistent with the hypothesis that, in general in the Sydney rental market, agents regardless of ethnicity are motivated to discriminate by statistical discrimination. Our result that profit, not prejudice, drives discrimination implies that it will prove resilient to unfettered housing market forces and changes in societal ethnic tolerance, but instead, must be addressed through enhanced civil rights enforcement strategies.

Japanese Social Exclusion and Inclusion from a Housing Perspective

This paper examines conditions of social exclusion and attempts at social inclusion in Japan from a housing perspective. Companies, households and the government have previously supported housing in Japan. However, corporate welfare was withdrawn following the globalization of the economy from the 1990s onwards, support from families and communities declined due to a reduction in household size, and governmental housing support has shifted away from direct support. A reduction in income and unstable work left many people with unstable housing. Certain workers, such as foreigners performing dispatched labour, could not maintain continuous work under the influence of the Lehman Brothers’ bankruptcy in 2008. Household size has shrunk according to changes in the industrial structure, and the number of households that cannot sustain housing is increasing. Such vulnerable households—elderly people, the handicapped, low-income earners and single parents—can become excluded from the rental housing market. On the other hand, governmental measures are promoting local dwellings and maintaining the condition for a dwelling service. Activities, such as local community support of the homeless have been initiated by various Non-profit Organisations (NPOs) and NPO activities are increasingly exemplifying measures to achieve social inclusion.

Urban floods and residential rental values nexus in Kumasi, Ghana

The supposition that the occurrence of flood event will have an inverse effect on rental values of residential housing properties is often accepted as a fact. However, the mechanism for this supposed impact has not been clearly articulated and the hypothesis is far from proven in Ghanaian housing rental market. This paper examined the impact of flood on residential rental values in Kumasi. The study adopted multiple research approaches in selecting zones with both flood and non-flood liable residential properties. The repeated sales model was then used to create local market indices to gauge flood impact on the rental values. The rental values of non-flooded residential properties were generally higher than their flooded counterparts by a margin of GHS 62.66 ±0.09 annually. While this supports existing postulations of a negative impact of flood on rental values, the results further showed that the extent of the impact varies across different residential property types. It is concluded that the wholesale assumption in literature that flood events diminish rental values should be interpreted with caution. The study recommends that the (dis)amenity effects of flood on rental values should therefore be assessed on case by case basis.Keywords: Floods, Ghana, Kumasi, Residential Rental Value, T-test

Information Asymmetry, Regulations, and Equilibrium Outcomes: Theory and Evidence from the Housing Rental Market

Following the financial crisis, rental markets in the U.S. remain tight. It is unclear, however, whether the shortfall in rental housing supply is transitory or structural. We explore the role of information asymmetry and regulations on equilibrium outcomes in rental markets in order to document the role of government regulations in reducing rental supply. We show that while landlords price the cost of regulations into rent, they also invest in tenant screening as regulation costs soar, restricting access to privately-supplied rental housing. Although the additional tenant screening is understandable, its magnitude is somewhat surprising.

Coping with Consequences of a Housing Crisis During Great War: A Case of Right-Bank Ukraine in 1914-1918

World War I led to radical changes in the government policy of participating countries. The enormous demographic and economic disturbances caused by the war forced the governments of all the belligerent nations to drastically restrict the market freedom. In particular, the state began actively intervening in the housing market. Ukraine as a part of the former Russian Empire, for the first time in its history saw the introduction of rent controls and protection of tenants from eviction. This paper concentrates on the government intervention in the rental housing market of Right-Bank Ukraine during World War I (1914–1918). It identifies the factors that made the state intervene in the relationships between landlords and tenants, analyzes changes in the housing legislation, and assesses the effectiveness of the regulations.

New Insights into Rental Housing Markets across the United States: Web Scraping and Analyzing Craigslist Rental Listings

Current sources of data on rental housing—such as the census or commercial databases that focus on large apartment complexes—do not reflect recent market activity or the full scope of the US rental market. To address this gap, we collected, cleaned, analyzed, mapped, and visualized eleven million Craigslist rental housing listings. The data reveal fine-grained spatial and temporal patterns within and across metropolitan housing markets in the United States. We find that some metropolitan areas have only single-digit percentages of listings below fair market rent. Nontraditional sources of volunteered geographic information offer planners real-time, local-scale estimates of rent and housing characteristics currently lacking in alternative sources, such as census data.

Agglomeration Effects and Liquidity Gradients in Local Rental Housing Markets

This paper empirically analyzes the relation between local liquidity in rental housing markets and urban agglomeration e�ects. Using listed rent o�ers from online market platforms, I study the cross-sectional variation of rental market liquidity. Local liquidity is negatively related to the distance to nearby located urban Agglomeration centers, manifesting in a decreasing liquidity gradient. I show that Agglomeration externalities expose local rental markets to a systematic liquidity risk. Furthermore, more thinly traded rental markets o�er lower capitalization rates for investors.

Quantifying a century of state intervention in rental housing in Germany

The paper aims at measuring the general state intervention in rental housing market in Germany from 1913 through 2015. Four policy classes are considered: Incentives for social housing, tenant protection, housing rationing, and rent controls. Based on a legislation analysis, for each class an index measuring the degree of regulation is constructed. The indices reflect dramatic increases in regulations during and after the World Wars. The 2010s are characterized by a surge in all classes of regulations related to the growing housing scarcity in large cities due to interregional migration leading to a geographical mismatch between housing supply and demand.