The rental next door: the impact of rental proximity on home values
Date
2012
Authors
Usrey, Wendy, author
Shields, Martin, advisor
Bernasek, Alexandra, committee member
Loomis, John, committee member
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Abstract
Literature in this area mainly focuses on the impacts of multi-unit complexes and low income housing. Little has been done specifically looking at the relationship between single-family rental homes and sales price. This paper extends the literature by modeling the impact of single-family rental proximity on home sales price using a unique spatial approach. Through the use of GIS software, I was able to specifically measure the density of single-family rental properties for each sold home, rather than following the "blanket approach" of measuring density as the `percent of rentals in the census tract' typical in the literature. With data collected for 2,766 homes sold between January 1, 2011 and July 1, 2012 in Fort Collins, Colorado, a hedonic price model was used to empirically test for the impacts of rental proximity on home values. I find strong evidence that proximity to single-family rental homes plays an important role in determining a home's selling price. Rentals within ¼ mile of a sold home had a negative impact on price, while rentals between ¼ and ½ mile had a positive impact on price. If rentals are considered an alternative to foreclosure or short sale, these results suggest the negative impacts of distressed sales are greater than those of rental properties on surrounding home values. Further research is needed to test for this scenario. Policy implications are discussed with a particular focus on the Three Unrelated Ordinance in Fort Collins, Colorado.
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Subject
three unrelated
foreclosure
Fort Collins
home value
real estate
rental