Do Wall Street Landlords Undermine Renters' Welfare?
Review of Financial Studies
97 Pages Posted: 28 Jun 2019 Last revised: 15 Mar 2022
Date Written: November 1, 2019
This paper examines 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 rent increased in neighborhoods where both merging firms owned properties (i.e., overlapped neighborhoods) relative to other non-overlapped neighborhoods. Meanwhile, crime rate also significantly decreased in overlapped neighborhoods after mergers. Our findings suggest that while institutional landlords leverage market power to extract greater surplus from renters, they also improve the quality of rental services by enhancing neighborhood safety.
Keywords: Real Estate, Home Rental, Institutional Investor, Merger
JEL Classification: G20, R30
Suggested Citation: Suggested Citation