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- Title
Do Owners Take Better Care of Their Housing Than Renters?
- Authors
Harding, John; Sirmans, C. F.; Miceli, Thomas J.
- Abstract
According to conventional wisdom, homeowners take better care of their housing than do renters, as a result of the rental externality. We argue that two forms of homeowner externality potentially create similar incentives for owners to undermaintain their housing. The first is due to the inability of prospective buyers to fully observe past seller maintenance, and the second is a result of the limited liability of borrowers in the event of mortgage default. Empirical analysis verifies the existence of the mortgage externality, but we find no evidence for the resale externality.
- Subjects
HOMEOWNERS; APARTMENT dwellers; HOUSING; EXTERNALITIES; HOUSE buying; HOUSE selling
- Publication
Real Estate Economics, 2000, Vol 28, Issue 4, p663
- ISSN
1080-8620
- Publication type
Article
- DOI
10.1111/1540-6229.00815