Do Wall Street Landlords Undermine Renters' Welfare?

76 Pages Posted: 28 Jun 2019 Last revised: 21 Oct 2020

See all articles by Jiabin Wu

Jiabin Wu

University of Oregon - Department of Economics

Steven Chong Xiao

University of Texas at Dallas - Naveen Jindal School of Management

Serena Wenjing Xiao

University of Texas at Dallas

Date Written: November 1, 2019

Abstract

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

Wu, Jiabin and Xiao, Steven Chong and Xiao, Serena Wenjing, Do Wall Street Landlords Undermine Renters' Welfare? (November 1, 2019). Available at SSRN: https://ssrn.com/abstract=3410281 or http://dx.doi.org/10.2139/ssrn.3410281

Jiabin Wu

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

Steven Chong Xiao (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Serena Wenjing Xiao

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

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