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Are There Investor Clienteles in Rental Housing?

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  • Gavin A. Wood
  • Yong Tu

Abstract

The possible existence of investor clientele groups has received little attention in the real estate finance literature. In this paper we develop a clientele model, which in equilibrium produces a clustering of investors by tax characteristics. Low‐tax‐bracket investors are concentrated in low‐value rental housing that attracts rents which are high in relation to property values. On the other hand, only high‐tax‐bracket investors will be observed in high‐value rental housing, and they charge rents that are low in relation to property values. An empirical model is specified and estimated using a cross section of investors in Australian private rental housing markets. Investor clienteles are detected among property investors, though there is a weak diversification effect indicating that clientele effects may be stronger among single property investors.

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  • Gavin A. Wood & Yong Tu, 2004. "Are There Investor Clienteles in Rental Housing?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(3), pages 413-436, September.
    • Handle: RePEc:bla:reesec:v:32:y:2004:i:3:p:413-436
    DOI: 10.1111/j.1080-8620.2004.00097.x
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    1. repec:syd:wpaper:9702 is not listed on IDEAS
    2. Capozza, Dennis R. & Seguin, Paul J., 1996. "Expectations, efficiency, and euphoria in the housing market," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 369-386, June.
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    Cited by:

    1. Jon Hall & Mike Berry, 2006. "Making Housing Assistance More Efficient: A Risk Management Approach," Urban Studies, Urban Studies Journal Limited, vol. 43(9), pages 1581-1604, August.
    2. Pnina O. Plaut1 & Steven E. Plaut, 2013. "Who Wants to be a Landlord? Factors that Affect the Inclination of Israeli Households to Rent out Property," International Real Estate Review, Global Social Science Institute, vol. 16(1), pages 119-133.

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