It needs to be affordable as well as multi unit.
There is a massive influx in many burbs of "luxury apartments" with rents $2500+ and I'm not talking downtown NYC. That's more than most mortgages.
There is a massive influx in many burbs of "luxury apartments" with rents $2500+ and I'm not talking downtown NYC. That's more than most mortgages.
How often are they new and how often are they "newly renovated"?
As I got a downvote I'm going to edit this and say I used to pay a little over $800/month for a particular apartment. About 7 years later I looked back at the complex. It had been completely remodeled and the cheapest unit was over $1600/month. How often is this happening?
But I'm talking about new developments. If you ever go to city council meetings where development proposals for new high density housing developments are discussed, you'll see a small slice of the incredible hassle they currently go through. Everyone wants to have a say in what others do with their land, numerous rounds of revisions are frequently required, and that means it's incredibly expensive to shepherd one of these things through. Fundamentally, those units cannot be cheap if that's what it takes to build them.
If housing stock expanded a lot, landlords would lose the pricing power that YieldStar is taking advantage of. The lack of surplus housing in desirable areas is the root problem, and the difficulty of getting new high density housing projects approved and developed in those areas is at the core of that. The vacancy rate of rental housing nationwide has been dropping for years, and that includes a lot of places where people aren't clamoring to live.
I'll also note that a falling occupancy rate is not mutually exclusive with the alleged practice of property managers warehousing inventory to prop up pricing. I also wonder how much the common practice of offering "new renter specials", rather than simply lowering rents to meet demand, contributes to ever-increasing "market rates."
1:https://web.archive.org/web/20220127071929/https://www.entra...
Do you have a source for property managers warehousing housing inventory? It doesn't ring true, at all.
I wonder what your interest is in handwaving these issues which are well-known and being acted on. You seem knowledgable except where it would tend to hurt your argument that everything is as it should be.
What say you on rent specials?
When you say 80%, what are you using to find those/take that survey? I’d just keep in mind that a lot of sites only show listings from buildings that are willing to pay, and there’s a high correlation with professionally managed buildings. This is also why you should never trust stats sourced from those sites, they don’t have a representative view of the market (a lot of news stories cite them uncritically when talking about rent trends).
Warehousing, care to cite something so I can read about it?
Rent specials are an easy way to adjust rent downward, without adjusting rent downward. If they rent to someone at a lower rate, then it’s a long term rather temporary discount. What are you wondering about it?
I'm just going to say that I don't think you're being completely honest, and leave it at that.
>I’d just keep in mind that a lot of sites only show listings from buildings that are willing to pay, and there’s a high correlation with professionally managed buildings.
We are talking about professionally-managed properties, so this isn't a problem. I don't think basement apartments, ADUs, etc. are representative of most people's experience with renting 1-3 bedroom apartments, particularly in my area, and I would be very surprised to find that they had a significant effect on the rate set for units in the large buildings and complexes where most renters live.
>Warehousing, care to cite something so I can read about it?
I will not. It has been written about extensively. It is suspicious that you would want to avoid an "inaccurate understanding", but have yet to look it up yourself. I would expect someone truly and dispassionately interested to have heard of it prior to this conversation, as it is evidently a significant issue wrt the nature of the contemporary rental market. A simple search will return many articles about it.
>Rent specials are an easy way to adjust rent downward, without adjusting rent downward. If they rent to someone at a lower rate, then it’s a long term rather temporary discount.
So, for example, a unit is rented for effectively $1300/m, discounted off a $1500/m base rent. The next year, there is no discount, and the unit renews at 5%-10% over the base, not discounted rent - potentially a $300 difference monthly. You don't think that this potentially distorts prices in the market?
If there's a need to not only put capacity on the market but fill it, the market will drive rent prices down because it is better to get something for your vacant unit than pay double the property taxes. If that doesn't work and there's still tons of vacant housing stock that is being held off the market to drive up rent, you can always keep raising the vacant housing tax until it works.
Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view.
There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties.
Most of YieldStar value proposition on the other hand is ultimately just a price discovery mechanism. Prices raise because people *are willing* to pay that much for apartment. People are willing to pay that much, because supply doesn't keep with demand.
Rich landlords will keep overcharging for rent as long as they are able. And more buildings just gives them more opportunities to exploit more renters. That is unless the renters strike or the government enforces rent control.
Please, don't agitate for more rent control, it's such a bad idea.
This becomes even more true as the business has a larger portfolio and more assets to devalue. It is in the common interest of all landlords to keep the rent high, so if they are able to sink the cost of keeping an apartment vacant, they will do it if it means that that cost will be realized as profit in their non-vacant units.
Tell me, why do you think rent control is a bad idea? For me it seems only bad if you are a landlord.
New apartments (like new cars) are always priced higher than older buildings, but give it a few years and prices drop.