Impact of Single-Family Home Foreclosures on Apartment Rents

Ying Huang, Mark A. Sunderman and Ronald W. Spahr

Journal of Housing Research, 2020, vol. 29, issue 2, 107-132

Abstract: We examine the impacts of single-family home foreclosures on rents for 513 apartment buildings in Shelby County, Tennessee from 2001 through 2016. We find significant, positive nonlinear relationships between foreclosure rates and apartment rents, suggesting that foreclosure market shocks increase demand for apartments and cause occupancy changes from owner to renter. Specifically, rents increase with increasing nearby neighborhood single-family home foreclosure rates. Foreclosure effects were exacerbated by the higher acute foreclosure rates occurring during the 2007–2009 financial crisis, indicating greater price impacts on rents, while during periods with lower foreclosure rates, price impacts were more attenuated. Additionally, impacts on rents vary by rent levels with greater rent increases for higher-end apartments relative to lower-end units.

Date: 2020
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DOI: 10.1080/10527001.2020.1846402

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