Do Wall Street Landlords Undermine Renters' Welfare?

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

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