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Keeping Up with the Blackstones: Institutional Investors and Gentrification

Abstract Views
871
Author
Neroli Austin
Category
Financial
Date Posted
2022/11/21
Date Retrieved
2022/11/22
Date Revised
2022/11/22
Date Written
2022/11/06
Description
Policy makers worry that institutional investment in residential real estate drives up house prices and crowds out minority residents. Using mergers of private-equity backed firms to isolate quasi-exogenous variation in concentration of ownership at the neighborhood level I find that shocks to institutional ownership indeed cause higher prices and rents — but contrary to popular opinion — increase rather than decrease neighborhood diversity. The reason for increased diversity is that some minorities benefit from the relaxation of borrowing constraints as a result of higher house prices and take out mortgages for home improvement increasing the attractiveness of their homes; other minorities move in because more rental properties become available as institutional ownership crowds out predominantly white individual home ownership. Institutional investors benefit from increased market values of their houses in increasingly attractive neighborhoods but also extract value by challenging tax
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JEL Classifications
G11 G23 M20R30
Keywords
Housing Real Estate Private Equity Gentrification
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Pages
91
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URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4283287
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