Expanding Supply of Single-Family Rental Housing in Zones with Good Schools Benefits Low- and Moderate-Income Children

By Esther Y. Colón-Bermúdez, NLIHC Research Analyst 

Research published in Real Estate Economics, “Single-family rentals as a pathway for access to high-performing public schools,” finds that the expansion of single-family rental housing near high-performing schools is associated with meaningful improvements in the school quality experienced by economically disadvantaged children. 

Low-income households in the United States that lack the financial means to purchase homes have historically had limited access to high-quality public schools because of the limited supply of rental housing near such schools. Following the Great Recession, the single-family rental market expanded dramatically as investors began purchasing and building single-family homes as long-term rentals. This may have enabled children to attend high-performing traditional public schools even if their parents could not afford to purchase homes near such schools. This study looks at the extent to which these changes in the single-family rental market were associated with improvements in school quality for children in renter households, particularly those who are economically disadvantaged. 

The study uses two complementary analyses. For the first analysis, the authors use data from the North Carolina Education Research Data Center and link it to Zillow's real estate records. The data covers students in traditional public schools from third through eighth grade between 2007 and 2016, and includes standardized test scores, student addresses, and economically disadvantaged status. The authors defined children who qualified for free or reduced-price lunch as economically disadvantaged. Schools are ranked into five quality tiers based on test scores. They test whether a higher share of single-family rentals is associated with economically disadvantaged students attending better schools after moving. The authors also estimate the rents that single-family homes in their data would command and use the standard 30% affordability threshold to determine if a low-income family could afford such rent. For the second analysis, they replicate the analysis across 13 metro areas in six states (Arizona, California, Florida, Georgia, North Carolina, and Nevada) using data from Zillow, state department of education websites, and the National Center for Education Statistics, and employing more rigorous statistical analyses. 

The North Carolina analysis included 43,399 student move observations that involved a school change and an address change to a single-family rental. The authors found that expanding the supply of single-family rentals near high-performing schools in North Carolina had a meaningful positive effect on the school quality experienced by moving students. The strongest effects were observed near the top-performing schools. Their results suggest that increases in the single-family rental stock have a stronger impact on the school quality experienced by economically disadvantaged students compared to other students. They find that renting a home near a top-performing school requires an income of about $38,811, indicating that many low-income families could potentially afford to rent a single-family home near a good school. Furthermore, in their multi-state analysis, they find that a 12-percentage point increase in the share of single-family rentals near a school leads to a 3-percentage point increase in the share of economically disadvantaged students attending that school, even near the best-performing schools. 

Policymakers pursuing housing and land use reforms to reduce economic inequality should carefully consider not only the type of housing being built, but also whether those homes will be renter- or owner-occupied. Expanding the supply of rental housing, particularly near high-performing schools, could serve as an effective means of improving educational access for low-income children. 

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