Does the rental housing market stabilize the economy? A micro and macro perspective

Rubaszek, Michał; Rubio, Margarita

doi:10.1007/s00181-019-01638-z

Cited by 31 publications

(17 citation statements)

References 24 publications

(30 reference statements)

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“…This is due to the fact that it is the rental market, compared to home-ownership, that is currently developing very fast all over the world, in response to increasing property prices and the problem of affordability. In addition, as Czerniak and Rubaszek ( 2018 ) and Rubaszek and Rubio ( 2020 ) state, a well-developed rental market contributes to the reduction of fluctuations in the entire housing segment, as well as to macroeconomic stability. Therefore, the first objective of this article is to examine the processes of convergence of residential rents across Polish provincial capitals.…”

Section: Introductionmentioning

confidence: 99%

Testing for overall and cluster convergence of housing rents using robust methodology: evidence from Polish provincial capitals

Tomal

2021

Empir Econ

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The aim of this paper is to test for overall and cluster convergence of housing rents across Polish provincial capitals and to identify drivers of convergence club formation. In order to achieve the goal of the study, several novel convergence tests were used, including the Kong et al. (J Econom 209:185–207, 2019. https://doi.org/10.1016/j.jeconom.2018.12.022) and Phillips and Sul (Econometrica 75:1771–1855, 2007. https://doi.org/10.1111/j.1468-0262.2007.00811.x) approaches. Moreover, club convergence analysis was carried out in four different configurations, varying in the technique of trend component extraction from the data. In particular, three well-known methods of time series decomposition were used, i.e. the Hodrick–Prescott, Butterworth and Christiano–Fitzgerald filters, as well as the most recent boosted Hodrick–Prescott filter. The results indicated that rental prices across the studied cities do not share a common path in the long run. It is possible, however, to identify convergence clubs where rents are moving towards a club-specific steady state. Detailed analysis of the structure of estimated clusters showed that data filtering using the boosted Hodrick–Prescott method leads to the most reliable allocation of cities to convergence clubs. Moreover, the estimation of logit models revealed that the likelihood of any two cities belonging to the same convergence club depends mainly on similar levels in terms of the unemployment rate, housing stock, city area, and the number of students. Finally, recommendations for local and national policy-makers concerning the development of the rental market have been formulated, particularly in the areas of urban land-use planning policy, housing legislation and public–private partnerships.

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Section: Introductionmentioning

confidence: 99%

Testing for overall and cluster convergence of housing rents using robust methodology: evidence from Polish provincial capitals

Tomal

2021

Empir Econ

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“…The fact is that young adults' decision to rent is not necessarily dictated by their preferences, but rather by circumstances and financial constraints [14][15][16][17]. Although usually, Poles prefer to own houses and flats rather than rent them [18], it is worth remembering that the current pandemic situation may well reverse this trend [19]. It should also be noted that in purely economic terms, due to the coronavirus, every third person has lost part of their earnings and every twentieth person has been completely deprived of any income [11].…”

Section: Introductionmentioning

confidence: 99%

Buying vs. Renting a Home in View of Young Adults in Poland

Bryx

Sobieraj

Metelski

et al. 2021

Land

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The deteriorating housing situation of young adults in many countries has become a subject of global interest. Researchers point to a number of factors that influence young adults’ decisions to own or rent a home. This paper examines the relationship between young adults’ inclination to own their own home and a range of different socio-economic factors. The study is of a quantitative-qualitative nature and was based on the results of a computer-assisted web interview (CAWI) questionnaire. The survey was conducted among young Poles aged 18–45 (n = 983). To analyse the results of the questionnaires, a logistic regression was used in which 24 different dichotomous and categorical variables were considered. Taking into account a number of individual characteristics (e.g., gender, education, hometown population size, etc.), the results show, for example, that single individuals and those with a higher level of tolerance for mortgage interest rates are more likely to own a home than to rent. This result highlights the desirability of easier access to mortgage credit. At the other end of the spectrum are those living with parents and those with dependents. The results imply that they are less interested in buying a home. Interestingly, declarations of a lack of funds for an own contribution when buying a new house/dwelling, or reluctance to expose oneself to financial difficulties throughout one’s life, do not discourage young adults from striving for their own dwelling, which further demonstrates the need to create appropriate mechanisms/instruments to facilitate the purchase of a dwelling for young adults.

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“…Despite all the aforementioned studies relating the real estate market to macroeconomics, there is a considerable gap with the absence of studies that include the rental market. By reviewing the empirical literature, we verified that only Mora-Sanguinetti and Rubio (2014) and Rubaszek and Rubio (2019) presented a model of an economy with residential rents. However, the first paper only evaluated the effects of subsidies on the acquisition of own houses or the reduction in income tax on housing acquired, in Spain and the euro area.…”

Section: Introductionmentioning

confidence: 74%

Rental market and macroeconomics: evidence for the US

Albuquerquemello

Besarria

2020

JES

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PurposeThe aim of this paper is to assess whether the inclusion of the rental housing market affect the dynamics of the real business cycles (RBCs).Design/methodology/approachFor this investigation, the authors model and estimate two dynamic stochastic general equilibrium (DSGE) versions for the US economy, one with and one without the presence of residential rent.FindingsThe findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks. The addition of this secondary housing market augments the effect of total factor productivity (TFP) shock on output and consumption. In addition, it increases the effect of the credit shock on the demand for housing. The latter highlights the role of credit for the real estate market. Therefore, the authors recommend that analysts and macro-prudential authorities consider adding it to their models.Originality/valueThe findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks.

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Does the rental housing market stabilize the economy? A micro and macro perspective

Cited by 31 publications

References 24 publications

Testing for overall and cluster convergence of housing rents using robust methodology: evidence from Polish provincial capitals

Testing for overall and cluster convergence of housing rents using robust methodology: evidence from Polish provincial capitals

Buying vs. Renting a Home in View of Young Adults in Poland

Rental market and macroeconomics: evidence for the US

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