Housing Vouchers, Tenant Quality and Apartment Values

Posted: 1 Nov 1999

See all articles by John D. Benjamin

John D. Benjamin

American University - Kogod School of Business

Peter T. Chinloy

American University - Department of Finance and Real Estate

G. Stacy Sirmans

Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law

Abstract

Landlords fact unique concerns in maximizing profits when they accept subsidized as well as unsubsidized tenants. Subsidized tenants tend to reduce overall tenant quality and to impose higher operating costs. By accepting subsidies, landlords may also subject themselves to periodic site inspections that may increase capital costs. Further, subsidized tenants may eventually crowd out unsubsidized tenants, lowering the average quality of the resident mix. Tests from Washington DC apartments on accepting and advertising for Section 8 tenants support these qualitative predictions. Accepting Section 8 tenants enhances revenues, but advertising for them lowers revenues. More aggressive solitication of subsidized tenants leads to a crowding out or displacement risk that dominates over any diminished collection risk.

JEL Classification: R21, R29

Suggested Citation

Benjamin, John D. and Chinloy, Peter and Sirmans, G. Stacy, Housing Vouchers, Tenant Quality and Apartment Values. Available at SSRN: https://ssrn.com/abstract=181496

John D. Benjamin (Contact Author)

American University - Kogod School of Business ( email )

4400 Massachusetts Avenue NW
Department of Finance
Washington, DC 20016
United States
(202) 885-1892 (Phone)
(202) 885-1946 (Fax)

Peter Chinloy

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-1951 (Phone)
202-885-1992 (Fax)

G. Stacy Sirmans

Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law ( email )

College of Business
Tallahassee, FL 32306
United States
850-644-8214 (Phone)
850-644-4077 (Fax)

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