Who's your landlord? Assortative matching in rental markets
Abstract
Landlords and tenants, on average, have opposite characteristics; but they display positive assortative matching within rental markets. In a nationwide data set containing administrative information on linked renter-occupiers and owners of investment properties for 4.5 million private rental dwellings in France, we document assortative matching by income level and composition, wealth, age, marital status and family structure, both across and within fine geographic segments. Consistent with a novel theory of rental housing assignment, the income correlation is only partially explained by observable characteristics such as location, size, or investment timing. It is mediated through high-wealth landlords listing higher-rent units occupied by high-income tenants, partly thanks to the filtering of the housing stock from past owner-occupiers to current renters. This pattern has quantitatively substantial implications for the measurement of returns to wealth, and the incidence of housing market policies, such as means-tested subsidies.
