Are Investors the Bad Guys? Tenure and Neighborhood Stability in Chelsea, Massachusetts
Author(s)Fisher, Lynn M.; Lambie-Hanson, Lauren Skiles
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In this article, we examine the role of investors and occupant-owners in an urban context during the recent housing crisis. We focus on Chelsea, Massachusetts, because it is a dense city, dominated by multifamily housing structures with high rates of foreclosure for which we have particularly good data. We distinguish between occupant-owners and investors using local data, and we find that many investors are misclassified as occupant-owners in the Home Mortgage Disclosure Act data. Then, employing a competing risks framework to study ownerships during the period 1998 through mid-2010, we find that local investors, who tend to invest more in relation to purchase prices and sell more quickly, experienced approximately 1.8 times the mortgage foreclosure risk of occupant-owners, conditional on financing. Nonlocal investors have no statistically significant difference in foreclosure risk from occupant-owners. Nonetheless, those owners with subprime purchase mortgages (most of whom are occupant-owners) faced the highest foreclosure risk when house prices fell.
DepartmentMassachusetts Institute of Technology. Department of Urban Studies and Planning
Real Estate Economics
Fisher, Lynn M., and Lauren Lambie-Hanson. “Are Investors the Bad Guys? Tenure and Neighborhood Stability in Chelsea, Massachusetts.” Real Estate Economics 40.2 (2012): 351–386.
Author's final manuscript