Do Wall Street Landlords Undermine Renters’ Welfare?

Abstract

We examine the recent rise of institutional investment in the single-family home rental market and its implications for renters’ welfare. Using institutional mergers to identify local exogenous variation in institutional landlords’ scale and market share, we show that rents increase in neighborhoods where both merging firms owned properties (i.e., overlapped neighborhoods) relative to other nonoverlapped neighborhoods. Meanwhile, the crime rate also significantly decreases in overlapped neighborhoods after mergers. Our findings suggest that while institutional landlords leverage their market power to extract greater surplus from renters, they also improve the quality of rental services by enhancing neighborhood safety.

The economic effects of real estate investors

“…Allen et al ( 2018), Mills et al (2019), and Brunson and Buttimer (2020) highlight the increasing importance of corporate investors (also referred to as legal entity or business or institutional investors) in housing markets and describe this new class of investors. Ganduri et al (2022), Smith and Liu (2020), Gurun et al (2023), and An (2022) focus on large institutional investors. Graham (2020) studies implications of the investors during the housing bust of the 2000s, and Lambie-Hanson et al ( 2022) during the recovery from the Great Recession.…”

“…(2022), Smith and Liu (2020), Gurun et al. (2023), and An (2022) focus on large institutional investors. Graham (2020) studies implications of the investors during the housing bust of the 2000s, and Lambie‐Hanson et al.…”

“… See, for example, Allen et al (2018), Mills et al (2019,Brunson and Buttimer (2020),Gurun et al (2023), Lambie-Hanson et al (2022), and Ganduri et al (2022). © 2023 American Real Estate and Urban Economics Association.…”

“Mom-and-pop” Landlords and Regulatory Backlash: A Seattle Case Study

“…The rental housing industry is a powerful political constituency in the United States with a long history of successfully aligning public policy with landlord interests (Keating and Kahn 2002). Contemporary narratives about the adverse effects of tenant protection laws on small-scale landlords can have important chilling effects on the willingness of policymakers to regulate rental markets at a historical moment characterized by unprecedented rental unaffordability and insecurity crises and at a time when housing experts are worried about the implications of rental ownership consolidation for tenants (Choi and Goodman 2020), a trend associated with higher rents and rates of eviction (Fields 2014;Raymond et al 2018Raymond et al , 2021Immergluck et al 2020;Leung et al 2021;Gomory 2022;Decker 2023;Gurun et al 2023).…”