For more information or to speak with a Bloustein School faculty member about their research, please contact Marcia Hannigan (848) 932-2828.
The foreclosure crisis and recession of 2008-09 forced millions of people from their homes, burdening property owners with impaired credit for years and plummeting homeownership to its lowest level in 50 years. While the economy gradually improved, wage growth did not keep pace, pushing homeownership out of reach for many. In Las Vegas investors in single-family homes entered this space to seize on the confluence of a large number of discounted homes, most through foreclosure sales. As a result a large number of households, including families with children, were locked out of the market for home buying.
Bloustein School assistant professor Eric Seymour and Joshua Akers of the University of Michigan, Dearborn examined evictions in the single-family rental market following the foreclosure crisis in Las Vegas in “‘Our Customer Is America’: Housing Insecurity and Eviction in Las Vegas, Nevada’s Post Crisis Rental Markets.”
Drawing on nearly 10 years of property ownership and eviction data, Seymour and Akers examine whether and to what extent large institutional landlords were more likely to evict tenants compared to landlords with smaller holdings.
During this period, investors purchased large numbers of homes and converted them to rental properties. The practices of several large single-family landlords with national inventories are associated with rising rents but also habitability concerns stemming from poor maintenance.
The largest investors in single-family rentals are subsidiaries of hedge funds and institutional actors, who make single-family rentals into a financial product for investors following the crisis. This marks a significant departure from the past when most single-family rentals were let by small local landlords. Corporate landlords have been charged with routinely raising rents and erroneously charging fees while automatically filing for eviction given any amount of delay in rental payments. While long-term tenants renting from local landlords might be allowed an occasional delay in paying rent on a set date, institutional landlords have streamlined practices prohibiting such flexibility.
Seymour and Akers found that many of these landlords have substantially higher eviction rates than small landlords, even after taking into account the characteristics of the property and neighborhood. They also found that, in addition to well-known national actors, large local landlords similarly capitalized on the crisis to enter the single-family rental market. These local actors, one of which is a major motel operator, had the highest eviction rates among all the landlords considered in this study.
The instability of the rental housing market extends to the residential motel market, where landlords exploited the housing needs of the working poor. Rents consumed most of a tenant’s income, making it difficult for many to continue to pay rent on a regular basis. Tenants who used motels for long term housing often had paychecks that fluctuated significantly from week to week, which made them vulnerable to eviction, and finally, homelessness.
The aftermath of the foreclosure crisis and the 2008-09 recession points to the continued precariousness of tenants, both in single-family rentals and motel housing. A closer examination of both issues is warranted. Single-family rentals may need rent regulation to prevent rentals rates from outpacing the cost-of-living while the use of motel rentals, which take up a disproportionate amount of renter’s income, reflects the need for low-income housing in communities across the country to prevent homelessness.