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Homeownership and the scarcity of rentals

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  • Halket, Jonathan
  • Pignatti Morano di Custoza, Matteo
Abstract
The provision of owner-occupied versus rental houses is modeled as a competitive search economy where households have private information over their expected duration. With public information, households with low vacancy hazard rates pay lower rents and search in thicker rental markets. With private information, rentals are under-provided to long-duration households to discourage short-duration households from searching there. Ownership is attractive in part because it cures the private information problem. Using a novel data set of rental listings, we show that homeownership rates are high where rent-to-price ratios are low but rentals are scarce and that long-duration households sort into scarce rental markets. These patterns are consistent with the model only under private information.

Suggested Citation

  • Halket, Jonathan & Pignatti Morano di Custoza, Matteo, 2015. "Homeownership and the scarcity of rentals," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 107-123.
  • Handle: RePEc:eee:moneco:v:76:y:2015:i:c:p:107-123
    DOI: 10.1016/j.jmoneco.2015.08.003
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    Cited by:

    1. Charles Ka Yui Leung & Joe Cho Yiu Ng, 2018. "Macro Aspects of Housing," GRU Working Paper Series GRU_2018_016, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
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    3. Jonathan Halket & Lars Nesheim & Florian Oswald, 2015. "The housing stock, housing prices, and user costs," SciencePo Working papers Main hal-03393224, HAL.
    4. Goodness C. Aye & Rangan Gupta, 2019. "Macroeconomic Uncertainty And The Comovement In Buying Versus Renting In The Usa," Advances in Decision Sciences, Asia University, Taiwan, vol. 23(3), pages 93-121, September.
    5. Daisy J. Huang & Charles Ka Yui Leung & Chung-Yi Tse, 2018. "What Accounts for the Differences in Rent-Price Ratio and Turnover Rate? A Search-and-Matching Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 57(3), pages 431-475, October.
    6. Jonathan Halket & Lars Nesheim & Florian Oswald, 2020. "The Housing Stock, Housing Prices, And User Costs: The Roles Of Location, Structure, And Unobserved Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1777-1814, November.
    7. Ambrose, Brent W. & Coulson, N. Edward & Yoshida, Jiro, 2018. "Reassessing Taylor rules using improved housing rent data," Journal of Macroeconomics, Elsevier, vol. 56(C), pages 243-257.
    8. Charles Ka Yui LEUNG, 2022. "Housing and Macroeconomics," ISER Discussion Paper 1197, Institute of Social and Economic Research, Osaka University.
    9. Goodness C. Aye & Rangan Gupta, 2018. "Macroeconomic Uncertainty and the Comovement in Buying versus Renting in the United States," Working Papers 201832, University of Pretoria, Department of Economics.
    10. Brent W. Ambrose & N. Edward Coulson & Jiro Yoshida, 2023. "Housing Rents and Inflation Rates," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(4), pages 975-992, June.
    11. Allen Head & Huw Lloyd‐Ellis & Derek Stacey, 2023. "Heterogeneity, Frictional Assignment, And Home‐Ownership," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(3), pages 1265-1308, August.
    12. Liberati, Danilo & Loberto, Michele, 2019. "Taxation and housing markets with search frictions," Journal of Housing Economics, Elsevier, vol. 46(C).
    13. Geoff Boeing & Jake Wegmann & Junfeng Jiao, 2020. "Rental Housing Spot Markets: How Online Information Exchanges Can Supplement Transacted-Rents Data," Papers 2002.01578, arXiv.org.
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    16. Philippe Bracke, 2021. "How Much Do Investors Pay for Houses?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 41-73, March.
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    18. Dongshin Kim & Youngme Seo & Julia Freybote, 2021. "Urbanity, Financial Crisis and the Timing of Homebuying Decisions by Young Households," The Journal of Real Estate Finance and Economics, Springer, vol. 62(4), pages 481-507, May.
    19. N. Edward Coulson & Walter D'Lima & David Jinkins, 2022. "Job match and housing tenure," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(6), pages 1576-1595, November.
    20. Ambrose, Brent W. & Coulson, N. Edward & Yoshida, Jiro, 2017. "Inflation Rates Are Very Different When Housing Rents Are Accurately Measured," HIT-REFINED Working Paper Series 71, Institute of Economic Research, Hitotsubashi University.

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