Abstract
Landlord abandonment of rental housing has affected many American cities since the 1960's. Because of data limitations, there have been few empirical analyses of the determinants of housing abandonment. In this paper, we use a rich database that contains information on individual residential properties in New York City to estimate a reduced form model of owner abandonment. We model an owner's decision to abandon his or her property as being similar to an investor's decision to exercise a put option on a financial instrument. When required to pay delinquent taxes, a wealth-maximizing landlord has an incentive to cede ownership of his or her residential property when the value of all outstanding liens exceeds the property's market value. Estimates from the model are used to examine whether empirical evidence supports this option model of abandonment.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 287-303 |
| Number of pages | 17 |
| Journal | Journal of Housing Economics |
| Volume | 7 |
| Issue number | 4 |
| DOIs | |
| State | Published - Dec 1998 |
Funding
* This research was made possible by a grant from the Edna McConnell Clark Foundation’s Program for New York Neighborhoods and the cooperation of the City of New York. The views expressed by the authors in this paper, as well as any errors and omissions, are solely the responsibility of the authors.
ASJC Scopus subject areas
- Economics and Econometrics