Federal Reserve Bank of Cleveland
Working Papers (Old Series)
Determinants of Differential Rent Changes: Mean Reversion versus the Usual Suspects
We study 2001-2004 and 2004-2007 rent growth of 18,000 rental units, ending our study prior to the Great Recession. Which variables correlate with rent growth: Location? Age? Rent level? Occupancy duration? Structure type? The answers deepen understanding of the rental market, help statistical agencies make decisions about sample stratification and substitution, and expose coverage problems. We document significant rent stickiness. Initial relative rent level is the best predictor, though mainly due to mean reversion. "Location" comes in second, though often not statistically significantly: the relative value of location is persistent. Age and occupancy duration are also notable. Our findings are reassuring to statistical agencies.
Cite this item
Randal Verbrugge & Alan Dorfman & William Johnson & Fred Marsh !!! & Robert Poole & Owen Shoemaker, Determinants of Differential Rent Changes: Mean Reversion versus the Usual Suspects, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 1511, 05 Aug 2015.
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- L8 - Industrial Organization - - Industry Studies: Services
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
Keywords: location; rent stickiness; mean reversion; inflation measurement
This item with handle RePEc:fip:fedcwp:1511
is also listed on EconPapers
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