Investigating the effects of service and management on multifamily rents: a multilevel linear model approach
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Investigating the effects of service and management on multifamily rents: a multilevel linear model approach Qiong Peng1,2 · Gerrit J. Knaap1,2 Received: 22 November 2019 / Accepted: 25 September 2020 © Springer Nature B.V. 2020
Abstract Unlike the large body of research on the determinants of single family prices and rents, the determinants of multifamily rents has received much less exploration. Using a recent and comprehensive micro-level dataset of multifamily housing units in Montgomery County, Maryland, USA, we applied a multilevel linear model with random coefficient to explore the determinants of multifamily rents, including the effects of service and management attributes. The findings are as follows: (1) first we find that a multilevel linear model is better suited to address datasets that include multiple apartment units in a smaller set of facilities, (2) for certain datasets—including ours–a random coefficients model outperforms both an OLS and random intercept model and (3) the effects of service and management variables on multifamily rents vary across types of service and management. Pet allowance, availability of short-term leasing options, and storage service availability increase rents significantly. Conversely, offering units to property employees and services to those with a disability decrease rents significantly. Keywords Housing · Service and management · Hedonic model · Multilevel linear model · Hierarchical linear model · Montgomery county · Multifamily rent
1 Introduction Multifamily housing1 plays a vital role in the U.S. real estate marketplace. As a primary rental housing type, multifamily housing accommodated 17.8 million multifamily renter households (14.5% of total households) in the United States in 2013.2 Even more, multifamily housing is 1 The definition of a multifamily house varies by organization. The standard industry definition of multifamily housing is a structure with five or more units. According to this definition, multifamily housing is also generally considered to be renter-occupied housing, while owner-occupied condominiums are usually not considered to be multifamily housing units even though they may be located in multifamily structures. 2 The number of households in multifamily rental housing comes from Multifamilybz.com. The definition of multifamily housing for this calculation is a structure with five or more units that is renter-occupied.
* Qiong Peng [email protected] 1
Department of Urban Studies and Planning, University of Maryland, College Park, MD 20742, USA
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National Center for Smart Growth, University of Maryland, 1219D Preinkert Field House, College Park, MD 20742, USA
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Q. Peng, G. J. Knaap
a common option for low- and medium-income households. Unlike single-family housing, multifamily housing provides unique services and management features. Multifamily housing services could include pet allowance, maid service, storage service, special services for those with disabilities, and more. Management features cou
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