One Mans Ceiling is Another Mans Floor One

One Man‘s Ceiling is Another Man‘s Floor One Man’s Ceiling is Another Man’s Floor: Landlord/Manager Residency and Housing Condition Porell, Frank W. 12 -11 -02 Thomas Ripfel 1

One Man‘s Ceiling is Another Man‘s Floor Agenda 12 -11 -02 1 Introduction 2 Model Development and Specification 3 Empirical Results 4 Conclusion Thomas Ripfel 2

Introduction Owner-occupant maintain housing better than absentee landlord Intuitive Reasons: More disposure to correct deficiencies, due to Awareness of problems police-like function devote more resources to investment actvitvity, since they utilize lower priced personal lower priced labor services Pride in the dwelling internalize negative externalities comparative advantage resident landlords hold in tenant selection select ones with lower propensity to impose wear and tear influence maintenance policy 12 -11 -02 Thomas Ripfel 3

One Man‘s Ceiling is Another Man‘s Floor Agenda 12 -11 -02 1 Introduction 2 Model Development and Specification 3 Empirical Results 4 Conclusion Thomas Ripfel 4

Model Development What has been done till that day. . . One way analysis of variance results by Sternlieb (1966) and Sternlieb and Burchell (1973): systematic differentials in housing condition by rental management form do exist. Multiple Regression by Ozanne and Struyk (1973): not supportive once tenant and neighborhood attributes were accounted for. Hedonic rent analyses leaded to mixed results. Peterson (1973) and Merril (1980): statistically significant rent discounts to tenants in landlord-occupied structures for St. Louis and Pittsburgh whereas in Pheonix there was no statistically rent discount . . . apparently the empirical support for the proposition of the superiority of landlord residency is rather weak. . 12 -11 -02 Thomas Ripfel 5

Model Development Landlord residents and absentee Landlords: Profit maximizing housing producers Transformation function J housing quality indicators S vector of building attributes H tenant attributes N neighborhood location attributes M form of rental management By weighting • • • 12 -11 -02 Thomas Ripfel 6

Specification of Composite Quality Indices A two step approach. . Define set of indicators (#28) Define weighting scheme (#6) 12 -11 -02 HUD CBO OMB WIEAND HEDONIC QUALITY PLUMB 3 2 2 1 45 1 KICHEN 3 2 2 1 33 1 SEWDIS 3 2 0 1 6 1 TOILET 3 2 2 0 0 1 DRY 0 2 0 0 6 1 SEWBREAK 0 2 0 0 0 1 UNVENT 3 2 2 1 0 1 HEAT. . . . . Thomas Ripfel 7

One Man‘s Ceiling is Another Man‘s Floor Agenda 12 -11 -02 1 Abstract 2 Model Development and Specification 3 Empirical Results 4 Conclusion Thomas Ripfel 8

Empirical Results Pooled cross section Annual Housing Survey data from 50 SMSAs from 1975 - 1977 time period Stratified data: 3 classed w. r. t. building characteristics STYPE-1: 2 - 4 units, 1 - 3 floors STYPE-2: > 5 units, > 1 - 3 floors STYPE-3: > 5 units, > 4 floors Units in structures of 2 – 4 with landlords or managers on site exhibit higher quality housing services than those units without landlord or manager on- site. 45. 5% reduction in deficiencies for landlord occupied 30. 4% reduction in deficiencies for manager occupied units No significant impact of landlord or manager residency was found for multifamily structures of 5 or more units. 12 -11 -02 Thomas Ripfel 9

One Man‘s Ceiling is Another Man‘s Floor Agenda 12 -11 -02 1 Abstract 2 Model Development and Specification 3 Empirical Results 4 Conclusion Thomas Ripfel 10

Conclusion Empirical support for the hypothesis of landlord and manager residency superiority as rental management form units in landlord- or manager-occupied structures of four of fewer are generally of superior condition relative to similar units with no resident landlord or manager Not supportive of landlord or manager superiority for larger multifamily buildings of five or more units. some speculative conclusions: suggests both landlords and manager residency effects were found to be significant that „pride of homeownership cannot account fully for the superior dwelling condition of landlord occupied buildings – pride contributory The greater the anonymity that large multifamily structures provide, the less the effectiveness of an implicit policing function Target for public policy 12 -11 -02 Thomas Ripfel 11