Staff Reports
Financing Constraints and Maintenance Investments: Evidence from Apartments
Previous title: “The Effects of Leverage on Investments in Maintenance: Evidence from Apartments”
Number 1000
December 2021 Revised July 2022

JEL classification: G3, G31, R30

Authors: Lee Seltzer

This paper studies the sensitivity of apartment maintenance investment to building financing frictions. Using a novel data set combining housing code violations from 45 US cities with apartment financing information, the paper shows buildings with more mortgage debt incur more code violations. It then exploits a natural experiment, effectively reducing financial resources for some New York City rent stabilized buildings. Following the shock, code violations increase for affected buildings relative to controls. This change in violations is concentrated among buildings with more mortgage debt. The results are consistent with financing constraints reducing maintenance investments, with consequences for renter quality of life.

Available only in PDF
Lee Seltzer
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at
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