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Multifamily Rental Housing, Socio-Economic and Demographic Factors, and Foreign Capital Flows – A ZIP Code Level Analysis

Author

Listed:
  • Meagan McCollum
  • Stanimira Milcheva

Abstract

This study investigates how location of US multifamily rental housing (MFRH) properties can impact on their investment performance. MFRH units are owned by companies and rented to households, including low and moderate-income households. In particular, we look at property performance characteristics such as occupancy rate, net operating income (NOI) and loan delinquency and assess how those are affected by within city variation of socio-economic and demographic factors. Such factors include household income, house prices, foreign capital flows into real estate, demographic factors such as age, race, ethnicity. We use data on securitized commercial mortgage loans between 1999 and 2016 in order to assess the relationship between property performance indications and the local economy. While the MFRH market provides opportunities for property investors and it should be better understood from an investor point of view, MFRH rental stock also is an important component of the alternatives to homeownership for households and is worthy of studying from this perspective as well highlighting the contribution of this study.

Suggested Citation

  • Meagan McCollum & Stanimira Milcheva, 2018. "Multifamily Rental Housing, Socio-Economic and Demographic Factors, and Foreign Capital Flows – A ZIP Code Level Analysis," ERES eres2018_131, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2018_131
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    References listed on IDEAS

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    1. Ambrose, Brent W & Sanders, Anthony B, 2003. "Commercial Mortgage-Backed Securities: Prepayment and Default," The Journal of Real Estate Finance and Economics, Springer, vol. 26(2-3), pages 179-196, March-May.
    2. Fernandes, Guilherme Barreto & Artes, Rinaldo, 2016. "Spatial dependence in credit risk and its improvement in credit scoring," European Journal of Operational Research, Elsevier, vol. 249(2), pages 517-524.
    3. Tracey Seslen & William C. Wheaton, 2010. "Contemporaneous Loan Stress and Termination Risk in the CMBS Pool: How “Ruthless” is Default?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(2), pages 225-255, June.
    4. Wayne R. Archer & Peter J. Elmer & David M. Harrison & David C. Ling, 2002. "Determinants of Multifamily Mortgage Default," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(3), pages 445-473.
    5. Sumit Agarwal & Brent W. Ambrose & Souphala Chomsisengphet & Anthony B. Sanders, 2012. "Thy Neighbor’s Mortgage: Does Living in a Subprime Neighborhood Affect One’s Probability of Default?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 40(1), pages 1-22, March.
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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