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
Date Written: October 2017
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: Suggested Citation