Working paper
Single-Family REITs and Local Housing Markets
Abstract. Institutional investors in single-family housing markets are often represented as worsening household well-being. We document the growth of single-family REITs (SFRs) and their (non-)effects on housing markets by constructing a novel dataset of SFRs’ underlying properties. SFRs purchase properties in neighborhoods encircling city centers, where housing supply is more elastic, and with populations facing homeownership barriers. Using a spatial differences empirical strategy, SFR growth relates to increased housing supply, lower mortgage approval rates, and modest price increases. These findings likely capture SFRs’ selection of neighborhoods rather than causal effects. SFR asset returns mirror representative housing portfolios despite their concentrated holdings.
Keywords: single-family rental, institutional investors, REITs, housing supply, house prices, homeownership, mortgage approvals.
In brief
Large institutional landlords in single-family housing are often blamed for hurting households, but this paper finds little evidence that they cause harm.
Building a new dataset of the homes owned by single-family REITs, the authors show these firms buy in neighborhoods ringing city centers, where housing supply is more elastic and residents face barriers to homeownership. REIT growth is associated with more housing supply, lower mortgage approval rates, and modest price increases, though these patterns likely reflect where REITs choose to buy rather than effects they cause. Returns on REIT housing portfolios mirror those of representative housing portfolios despite their concentrated holdings.
| Panel A. Design | ||
|---|---|---|
| Question | Do institutional landlords in single-family housing harm local housing markets? | |
| Data | A new dataset of the properties owned by single-family REITs | |
| Method | Spatial differences | |
| Panel B. Main findings | ||
| Where REITs buy | Neighborhoods encircling city centers, with elastic housing supply and barriers to homeownership | |
| Associated with REIT growth | More housing supply, lower mortgage approval rates, modest price increases | |
| Interpretation | Likely reflects where REITs choose to buy rather than causal effects | |
| REIT returns | Mirror representative housing portfolios | |
Summarized from the paper. See the paper for exact estimates and specifications.
Read and cite
- Working paper, SSRN
Giacoletti, Marco, Rawley Z. Heimer, Wenli Li, and Edison Yu. “Single-Family REITs and Local Housing Markets.” Working paper.
@unpublished{heimer2024reits,
author = {Giacoletti, Marco and Heimer, Rawley Z. and Li, Wenli and Yu, Edison},
title = {Single-Family {REITs} and Local Housing Markets},
note = {Working paper},
year = {2024},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4895275}
}
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