Essays in Rental Housing Finance and Urban Economics

This dissertation explores two aspects of rental housing markets and the structure of housing in cities. The main chapter studies how multifamily rental housing is financed and how changes in financing costs affect landlords management and rental pricing. The second chapter analyzes demand for rental housing. I study the causal effects of changes in the income of low-wage earners on rent-to-income ratios, using variation coming from minimum wage increases. The first chapter of my dissertation studies how and why landlords change their behavior when their mortgage financing changes. This paper provides evidence on how much landlords raise (or change) their rental prices when they face higher (or lower) mortgage rates. I study changes in the size of their mortgage payments, and opportunities to refinance, renovate, or sell their property. I find that landlords change their behavior in each of those cases, even when we would not expect them to respond. Analyzing city-level variation in the share of multifamily apartments refinancing or selling annually, this rental financing variation is strongly correlated with average rental price growth. I conclude by discussing some implications of changing financing costs on rental housing markets, particularly for monetary policymakers. The second chapter of this dissertation studies how changes in minimum wage laws affect low-wage renters. Policymakers and advocates have expressed concern about whether landlords capture the bulk of income gains when minimum wages rise. In difference-in-differences regressions, comparing states with rising minimum wages to those without, I find that minimum wage increases lead to declining rent-to-income ratios for low-wage householders. For policymakers, this suggests that landlords do not capture all of the welfare gains for low-wage workers (e.g. from rental price increases). This result also suggests that housing demand, especially for low-wage workers is non-homothetic---an increase in income does not lead to an equal increase in spending on housing.