The Stages of Rental Housing Ownership: Accelerated Depreciation and The Rapid Turnover Syndrome

Abstract

This paper argues that accelerated depreciation or cost recovery causes frequent turnover of rental housing ownership as tax advantages disappear after seven to ten years. The practice of balloon mortgages in which most of the principal is due at the end of ten years contributes to the trend. Three stages of ownership, each with distinctive landlord types, emerge in this setting. The triggers causing a decline to the next stage are discussed. The rapid turnover also brings lack of long-term commitment to maintenance, increased debt service with each sale and co-op or condo conversion as traditional buyers leave the rental housing market.

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Notes on contributors

Brian J. O’Connell

Brian J. O’Connell is Associate Professor, Department of Sociology and Anthropology at St. John’s University, Jamaica, New York.