* and low-income renters cannot afford to buy their property (even if it were for sale)

We see strong market segmentation: low-rent properties in NL & BE are owned by unincorporated (P) landlords with 10-50 properties. Corporate investors (B) invest in high-end rentals instead.

What about regulatory risk? Isn't there a high risk that future cash flows on low-rent properties could be regulated away? We build a new Renter Protection Index from US State laws with CatGPT. Find no evidence for this story. If anything, goes the wrong way.

One natural explanation for this could be risk. Maybe lower rent properties have cash flows that go down more in recessions? Not true, in fact the opposite happens. Affordable housing is an inferior good for households, a recession hedge for investors.

For BE and NL we break down costs by decile. Lower-rent housing is older and requires more maintenance/capex. Also has higher tenant turnover and credit loss, and higher property management fees. But none of that is enough to eliminate the slope in rents.

This is a one-picture paper. Net rental yields and capital gain yields are both declining in rent levels. Total housing returns are 1.7% (Belgium), 3.6% (NL), and 3.9% (US) higher per year for the lowest than for the highest decile of rents.

📣 New paper alert: An Alpha in Affordable Housing?

A collaboration with Matthijs Korevaar and Stijn Van Nieuwerburgh.

We show that low-rent/low-income housing earns the highest returns for landlords in the US, Belgium and The Netherlands.

Please share to convince my coauthors to join Bluesky :-)

A big thank you to Romeo Mercken (CEO of Quares Investment Services) for delivering an insightful guest lecture on investments in residential real estate and the current trends shaping the real estate market.