Estimating the Vulnerability of Households to Rent Increases

Jin Man Lee, James Shilling and Janet Ge

ERES from European Real Estate Society (ERES)

Abstract: The paper examines the vulnerability of US households today (2020-2022) to the risk of rent increases compared to previous years, particularly 2007-2015. To measure vulnerability requires a normative framework. We follow the approach developed by Sinai and Souleles (2005). We find that households are more vulnerable to rent increases now than they were at the start of our sample period. Traditionally, owning a property has been the primary means of hedging against rising rent risk. However, not all households can afford this option. We propose that insurance contracts could provide an alternative solution for households to hedge against the risk of rising rents. Similar to renters insurance, which protects personal belongings, these contracts could offer protection against rent hikes.

Keywords: housing; Investment Decision; Rents; Risk and Uncertainty (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-inv and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2025_33

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