Humphries et al. (2024)

The economics of Housing & Homelessness

Overview

We would like to better understand the decision problem for a landlord when a tenant fails to pay rent so that we can better shape policy

Essence of the Motivation

Empirical Observations

  • "Nonpayment events are far more common than eviction filings"
  • "Forbearance is targeted at tenants with relatively high probability of recovery"

Findings

  • "Most evicted tenants have low probability of paying rent over the next 12 months"

Findings in contrast to Empirical Observations involve Counterfactuals

Background

Novel Descriptive Statistics

  • "Apartments remain vacant for about 2 months on average after a tenant departs"

Keep in Mind that these are Statistics for tenants who were allowed to fall `x' months behind ... 

Risk

\text{Evict}_{it} = \alpha_t + \alpha_{l(i)} + \alpha_{\tau(i,t)} + \sum_b \beta_b 1_{\{Bal_{it} = b\}} + \gamma B_{it} + \delta B_{it} 1_{\{Tenure_{it} > 12\}} + \epsilon_{it}

Evicted

Time

Landlord

Tenure

Balance

Months Behind

The Model

Limitations of the Model

  • "Filing an eviction is an irreversible decision"
  • "Landlords learn about tenant types over time only through rent payments"