Mortgage Supply and Housing Rents

The Review of Financial Studies, Volume 31, Issue 12, December 2018, Pages 4884–4911, DOI: 10.1093/rfs/hhx145

59 Pages Posted: 30 Mar 2016 Last revised: 26 Nov 2019

See all articles by Pedro Gete

Pedro Gete

IE Business School; IE University

Michael Reher

University of California, San Diego (UCSD) - Rady School of Management

Date Written: October 2017

Abstract

We show that a contraction of mortgage supply after the Great Recession has increased housing rents. Our empirical strategy exploits heterogeneity in MSAs' exposure to regulatory shocks experienced by lenders over the 2010-2014 period. Tighter lending standards have increased demand for rental housing, leading to higher rents, depressed homeownership rates and an increase in rental supply. Absent the credit supply contraction, annual rent growth would have been 2.1 percentage points lower over 2010-2014 in MSAs in which lending standards rose from their 2008 levels.

Keywords: Rents, Mortgage Markets, Homeownership, Credit Supply, Regulation

JEL Classification: G18, G21, G28, R21, R38

Suggested Citation

Gete, Pedro and Reher, Michael, Mortgage Supply and Housing Rents (October 2017). The Review of Financial Studies, Volume 31, Issue 12, December 2018, Pages 4884–4911, DOI: 10.1093/rfs/hhx145, Available at SSRN: https://ssrn.com/abstract=2756056 or http://dx.doi.org/10.2139/ssrn.2756056

Pedro Gete (Contact Author)

IE Business School

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

IE University ( email )

Calle Pedro de Valdivia 21
Madrid, Madrid 28006
Spain

Michael Reher

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

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