Horizon Risk in Renting: Evidence from a PropTech Rental Platform
63 Pages Posted: 6 Apr 2022 Last revised: 11 Dec 2023
Date Written: July 5, 2022
Abstract
Rental contracts are often short-term, creating uncertainty for renters regarding the duration of their occupancy. We analyze the factors influencing the horizon of rental occupancy. Utilizing contract-level data from a PropTech rental platform, we find that housing market conditions significantly impact the rental supply horizon. Landlords in neighborhoods with higher housing price and rent growth offer shorter contracts and are less likely to renew expiring ones. This effect is more pronounced among younger landlords and those with multiple or highly marketable properties. We further establish causality using an exogenous policy change that differentially affects the prices of different housing units.
Keywords: Housing price, rental housing, contract duration, horizon risk, PropTech
JEL Classification: G11, G41, L85, R31, R38
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