Financial Intermediaries as Suppliers of Housing Quality

82 Pages Posted: 7 Sep 2019 Last revised: 4 Nov 2019

See all articles by Michael Reher

Michael Reher

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

Date Written: October 1, 2019

Abstract

I document a recent surge in improvements to rental housing quality, and I show how financial intermediaries have contributed to this surge by reallocating financing to improvements from other types of real estate investment. Using exogenous variation generated by a 2015 change in regulatory capital requirements, I find that a reallocation of bank credit accounts for 44% of post-2015 improvements. The shock increases the supply of high-quality housing, which raises average rent but lowers high-quality rent, and it accounts for 31% of post-2015 rent growth. Finally, I show how a reallocation of private equity has also increased real improvement activity.

Keywords: Banks, Housing Quality, Rent, Financial Regulation, Private Equity

JEL Classification: G21, G23, G28, R30, R31

Suggested Citation

Reher, Michael, Financial Intermediaries as Suppliers of Housing Quality (October 1, 2019). Available at SSRN: https://ssrn.com/abstract=3446411 or http://dx.doi.org/10.2139/ssrn.3446411

Michael Reher (Contact Author)

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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