Nonpayment and Eviction in the Rental Housing Market

72 Pages Posted: 5 Dec 2024

See all articles by John Eric Humphries

John Eric Humphries

Yale University - Department of Economics

Scott Nelson

University of Chicago - Booth School of Business

Dam Linh Nguyen

New York University (NYU) - New York University

Winnie van Dijk

Yale University

Daniel C. Waldinger

New York University (NYU) - Furman Center for Real Estate and Urban Policy

Multiple version iconThere are 2 versions of this paper

Date Written: October 30, 2024

Abstract

Recent research has documented the prevalence and consequences of evictions in the United States, but our understanding of the drivers of eviction and the scope for policy to reduce evictions remains limited. We use novel lease-level ledger data from high-eviction rental markets to characterize key determinants of landlord eviction decisions: the persistence of shocks to tenant default risk, landlords' information about these shocks, and landlords' costs of eviction. Our data show that nonpayment is common, is often tolerated by landlords, and is often followed by recovery, suggesting that landlords face a trade-off between initiating a costly eviction or waiting to learn whether a tenant can continue paying. We develop and estimate a dynamic discrete choice model of the eviction decision that captures this trade-off. Estimated eviction costs are on the order of 2 to 3 months of rent, and the majority of evictions involve tenants who are unlikely to pay going forward. As a result, while commonly-proposed policies can generate additional forbearance for tenants, they do not prevent most evictions. Compared to policies that create delays in the eviction process, increasing filing fees or providing short-term rent subsidies are more likely to prevent evictions of tenants who would resume paying.

Suggested Citation

Humphries, John Eric and Nelson, Scott and Nguyen, Dam Linh and van Dijk, Winnie and Waldinger, Daniel C., Nonpayment and Eviction in the Rental Housing Market (October 30, 2024). Fama-Miller Working Paper, Chicago Booth Research Paper 24-19, Available at SSRN: https://ssrn.com/abstract=5045592 or http://dx.doi.org/10.2139/ssrn.5045592

John Eric Humphries

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

HOME PAGE: http://www.johnerichumphries.com

Scott Nelson (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Dam Linh Nguyen

New York University (NYU) - New York University ( email )

Department of Economics
19 West 4th Street
New York, NY 10012
United States

HOME PAGE: http://https://dlinh-n.github.io/

Winnie Van Dijk

Yale University ( email )

493 College St
New Haven, CT 06520
United States

Daniel C. Waldinger

New York University (NYU) - Furman Center for Real Estate and Urban Policy ( email )

New York, NY 10012
United States

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