Authors
Abstract
Rental and owner-occupied housing constitute distinct submarkets, with different costs and considerations for families. When comparing observably similar housing units in the two submarkets, how expensive is rental housing relative to owner-occupied housing? This comparison matters both to families and to policymakers, who must decide how to allocate limited funding for affordable housing programs. We apply matching techniques to American Housing Survey data from 2017 and 2021, finding that rental units tend to be more expensive than physically similar owner-occupied units. Accounting for the portion of mortgage payments that constitutes savings, renters in the Minneapolis-St. Paul region pay at least an extra $143 per month, or 9.4 percent of their housing costs. Among the metro areas contained in our data, the Twin Cities feature a rental premium towards the lower end of the range.