The external impacts of rental properties on the price of single-family residences.

摘要

This study examines the effects that rental properties in a residential neighborhood have on the selling price of single-family residences in that area. The analysis blends real estate valuation concepts with evidence found in housing tenure, housing maintenance policy and urban succession studies in the economics literature. Evidence from all of these areas is incorporated in order to develop testable hypotheses regarding the property-specific, proximity-related and neighborhood-wide impacts of rental properties on property prices.Estimation models to test the joint effect of the above hypotheses are constructed following the hedonic price theory (HPT) framework. The data used to test the hypotheses include the tenure status of 23,119 single-family residences and 1,162 single-family sales. Regression equations, both linear and non-linear, are used to analyze the patterns of association between the property price and a set of regression variables, namely, housing structure variables, locational variables, time variables, financing variables and a set of rental property variables. The results indicate that the presence of rental properties in a residential neighborhood has a negative impact on the selling prices of all single-family properties in that neighborhood. Furthermore, a single-family residence sells for less if it is a rental unit or is surrounded by a large number of rental properties.Although numerous studies on the price impacts of other externalities have been published, this study is the first to examine the price impacts caused by the separation of property rights and the economic decision-making behavior of tenants and landlords. This evidence provides insight into the mortgage underwriting decision and implications for city zoning regulations.