Rental Market Microstructure
Paper Session
Saturday, Jan. 3, 2026 10:15 AM - 12:15 PM (EST)
- Chair: Isaac Hacamo, Indiana University
An Empirical Equilibrium Model of the Markets for Owner-Occupied and Rental Housing
Abstract
A large and growing share of households rent from private landlords. I empirically analyze how landlord supply constraints affect welfare and housing affordability by influencing rents, prices, and allocation of houses between the rental and owner occupied sectors in the UK in the presence of household borrowing constraints. I combine several novel datasets of UK property markets and document three key facts that suggest the impact of landlord supply constraints on the housing market: (i) housing quality is segmented between the rental and owner-occupied sectors, with rentals generally offering lower quality, (ii) cities with more pronounced quality segmentation tend to have higher rent-to-price ratios, and (iii) in more segmented cities landlords have fewer assets. To quantify the effect of landlord supply constraints on the housing market, I develop and estimate a two-sided assignment model which features households’ optimal choice of housing quality and tenure (i.e., the choice to rent or own) in the presence of borrowing constraints, landlords’ profit-maximizing choice of quality to rent out, and endogenous quality segmentation and rent-to-price ratios which are determined in equilibrium. I conduct counterfactual experiments to show that landlord supply constraints explain much of the variation in quality segmentation and rent-to-price ratios across cities.Market Power and the Welfare Effects of Institutional Landlords
Abstract
In the last decade, large financial institutions in the United States have purchased hundreds of thousands of homes and converted them to rentals. This paper studies the welfare consequences of institutional ownership of single-family housing. We build an equilibrium model of the housing market with two sectors: rental and homeownership. The model captures two key forces from institutional purchases of homes: changes in rental concentration and reallocation of housing stock across sectors. To estimate the model, we construct a novel dataset of individual homes in metropolitan Atlanta, identifying institutional owners of each house and collecting house-level daily prices, rents, vacancies, web page views, and customer contacts from Zillow. Overall, we find that institutional acquisitions decrease rents and increase rental transactions, leading to large welfare gains for renters. This net benefit reflects two opposing forces: while higher concentration raises rents, higher rental supply lowers rents enough to more than offset the effect of concentration, pushing rents down overall. These renter gains come at the expense of homebuyers, whose welfare falls. On the supply side, institutional acquisitions benefit house sellers but harm the average landlord.Market Power in Residential Real Estate: Evidence from Chicago Rental Properties
Abstract
This paper investigates the impact of market power in residential real estate. I study this question empirically in the context of the Chicago rental market. To do so, I build a novel dataset that links the universe of market-rate multifamily properties and their owners from 2000 to 2023. Using a staggered event study design, I find that acquisitions of competing properties raise price and reduce occupancy. I then estimate a structural model of rental demand and supply, and I use the estimates to calculate welfare under various policy counterfactuals. These results highlight how market power mediates the effectiveness of urban rental policies and shapes housing affordability in the 21st century.Discussant(s)
Gi Heung Kim
,
Boston College
Pierre Mabille
,
INSEAD
Stijn Van Nieuwerburgh
,
Columbia University
Oren Ziv
,
Michigan State University
JEL Classifications
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location
- D4 - Market Structure, Pricing, and Design