An Examination of the Impact of Rent Control on Mobile Home Prices in California

49 Pages Posted: 19 Oct 2006

See all articles by Diehang Zheng

Diehang Zheng

University of Southern California - Sol Price School of Public Policy

Yongheng Deng

Wisconsin School of Business, University of Wisconsin-Madison

Peter Gordon

University of Southern California - Sol Price School of Public Policy

David Dale-Johnson

University of Southern California - Marshall School of Business

Date Written: September 2006

Abstract

This study examines the impact of rent control of mobile home parks in seven counties of California between 1983 and 2003. We assembled an extensive and timely data set and, thus, were able to test more carefully specified econometric models than had been employed in prior studies of California mobile-home rent control. We find that the nature of the rent control regime differentially impacts mobile home prices: the imposition of rigid rent control, rent control without vacancy decontrol, leads to higher growth rates in resale prices. While a flexible regime, or rent control with vacancy decontrol, results in lower growth rates in resale prices. This is consistent with economic theory, suggesting that the imposition of rigid rent control will lead to the capitalization of future rent savings when a coach is sold. That is, the buyer will not only pay for the coach but also for the net present value of the expected savings associated with the future legally constrained pad rent obligations to the landlord.

Keywords: Mobile Home, Rent Control, Capitalization, Regulatory Taking

JEL Classification: R52, L51, K20

Suggested Citation

Zheng, Diehang and Deng, Yongheng and Gordon, Peter and Dale-Johnson, David, An Examination of the Impact of Rent Control on Mobile Home Prices in California (September 2006). Available at SSRN: https://ssrn.com/abstract=937835 or http://dx.doi.org/10.2139/ssrn.937835

Diehang Zheng

University of Southern California - Sol Price School of Public Policy ( email )

Los Angeles, CA 90089-0626
United States

Yongheng Deng (Contact Author)

Wisconsin School of Business, University of Wisconsin-Madison ( email )

4110 Grainger Hall
975 University Avenue
Madison, WI 53706
United States
+1 (608) 262-4865 (Phone)

HOME PAGE: http://https://bus.wisc.edu/faculty/yongheng-deng

Peter Gordon

University of Southern California - Sol Price School of Public Policy ( email )

Los Angeles, CA 90089-0626
United States

David Dale-Johnson

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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