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Horizon Risk in Renting: Evidence from a PropTech Rental Platform

64 Pages Posted: 6 Apr 2022 Last revised: 11 Dec 2023

See all articles by Jiayin Hu

Jiayin Hu

Peking University - National School of Development (NSD); Peking University - Institute of Digital Finance; Peking University - China Center for Economic Research (CCER)

Maggie R. Hu

Zicklin School of Business, Baruch College - The City University of New York

Shangchen Li

Peking University - Guanghua School of Management

Yingguang Zhang

Peking University - Department of Finance, Guanghua School of Management

Zheng Zhang

Peking University - Department of Finance, Guanghua School of Management

Date Written: July 5, 2022

Abstract

Rental contracts are often short-term, creating uncertainty for renters regarding the duration of their occupancy. We analyze the factors influencing the horizon of rental housing supply. Using contract-level data from a PropTech rental platform, we find that housing market conditions significantly impact the rental supply horizon. Landlords in neighborhoods experiencing higher housing price growth and rent growth offer contracts of shorter durations and are less likely to renew expiring contracts. This effect is more pronounced among younger landlords and those with multiple or highly marketable properties. We establish causality using an exogenous policy change that differentially affects the prices of different housing units.

Keywords: Housing price, rental housing, contract duration, horizon risk, PropTech

JEL Classification: G11, G41, L85, R31, R38

Suggested Citation

Hu, Jiayin and Hu, Maggie and Li, Shangchen and Zhang, Yingguang and Zhang, Zheng, Horizon Risk in Renting: Evidence from a PropTech Rental Platform (July 5, 2022). Available at SSRN: https://ssrn.com/abstract=4060219 or http://dx.doi.org/10.2139/ssrn.4060219

Jiayin Hu

Peking University - National School of Development (NSD) ( email )

5 Yiheyuan Rd
Beijing, China 100871

HOME PAGE: http://nsd.pku.edu.cn/szdw/qzjs/h/496603.htm

Peking University - Institute of Digital Finance ( email )

5 Yiheyuan Rd
Haidian District
Beijing, 100871
China

Peking University - China Center for Economic Research (CCER)

5 Yiheyuan Rd
Beijing, China 100871

Maggie Hu

Zicklin School of Business, Baruch College - The City University of New York ( email )

55 Lexington Ave., Box B13-260
New York, NY 10010
United States

Shangchen Li

Peking University - Guanghua School of Management ( email )

Yingguang Zhang (Contact Author)

Peking University - Department of Finance, Guanghua School of Management ( email )

Beijing, Beijing 100871
China

Zheng Zhang

Peking University - Department of Finance, Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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