5 ms·

If you're a renter and you when lease renewal time comes up and you see twice as many open units in your apartment, wouldn't you also bargain more aggressively

If you're a renter and you when lease renewal time comes up and you see twice as many open units in your apartment, wouldn't you also bargain more aggressively with your landlord? Conversely, if you're a building manager and you an X% occupancy rate target, you're going to need to cut prices in order to maintain that rate if a bunch of tenants don't renew. This is pretty much textbook microeconomics 101. Going a bit further, occupancy rate is a signal that both sides of the market can (noisily) observe, so if the prior non-occupancy rate was very low, you'd expect a shock that doubles the rate (say, 5% -> 10%) to lead to perhaps a larger price change than in a less tight market (such as 10% -> 15%)

mjevans 6y ago
In practice I've never known how many other units were occupied, and the land lords are incredibly incentivized to sit on empty units over reducing the value of the property by lowering rent ever. The numbers thus _only_ go one direction.
- zucker42 6y ago
  Rents dropped significantly at the start of the pandemic in my area (from $3400 around this time last year to $2500). It's partly because I'm right next to a big college.
  - asdff 6y ago
    In my area in LA the only drops that I've seen are management companies offering a month or so free, to keep up base rent at full price. Maybe smaller landlords are dropping prices, but it's hard to see much of a trend. I will say when I moved out of my complex into a more private place, my parking lot had like 50% capacity (it used to be full before the pandemic).
jonahbenton 6y ago
Simple supply and demand is a one-time game model. Property is a repeated, long term subgame component of the much larger repeated long term game that is the financial system. Dynamics are completely different. One example, it makes more sense to give someone 3-6 months free at price $X than to get them in at .5 or .75 $X.
- hkmurakami 6y ago
  To add to this, player dynamics are quite different between big corporate landlords and small landlords.
thewebcount 6y ago
> wouldn't you also bargain more aggressively with your landlord? It depends on the landlord. If they were reasonable, then yes, I'd bargain with them. If they were total pricks for most of the time I was there, then screw them. I can get my lower rent and hurt them in the process. I'll try that option! (At least, I bet that's the thinking of many people.)
kbenson 6y ago
I agree with this in general. I'm not sure how it bolsters or refutes what I said. The premise I was responding to is that noting change in inventory will show much larger swings if there's relatively few units on the market, and that may be a poor indicator of what's going on. Simplified, it's the difference between a market of 100 units of this 10 are avaiable inventory, and seeing an increase of 3 units (30% raise in available inventory) and a a market of 100 units that has 1 unit available and sees an increase of 2 units (200% increase in available inventory). There was an increase in inventory, and it helps, but probably not as much as 200% would lead one to believe. The article itself noted the latter was the case in SF as there was "unusually low inventory" compared to other cities beforehand. Of course the difference is going to look outsized, in that case. > if the prior non-occupancy rate was very low, you'd expect a shock that doubles the rate (say, 5% -> 10%) to lead to perhaps a larger price change than in a less tight market (such as 10% -> 15%) That depends on so many other factors that I think you can't easily generalize like that for housing. If the inventory is still very low, and now instead of being uber-rich you just need to be very-rich, you're still so constrained in your potential customers that the price range may not change significantly, or if you're still catering to a class of people that do or don't traditionally commute, or if the price is hovering near the break even for a lot of people for commuting vs living local, or whether the work in the area that many of the potential customers does can be done remotely (as these articles are about), etc. Housing is one of the most complicated markets, and there are numerous counterexamples of the exact opposite happening to what you describe
asdff 6y ago
In reality, most landlords will sooner tell you to walk and hold an empty apartment for a year than balk on rent.
diebeforei485 6y ago
Depends. Some landlords are not worth it and it's better to leave. That said, a lot of folks in SF are on month-to-month leases so they can just give a 30-day notice and peace out.

mjevans 6y ago

In practice I've never known how many other units were occupied, and the land lords are incredibly incentivized to sit on empty units over reducing the value of the property by lowering rent ever. The numbers thus _only_ go one direction.

zucker42 6y ago
Rents dropped significantly at the start of the pandemic in my area (from $3400 around this time last year to $2500). It's partly because I'm right next to a big college.
- asdff 6y ago
  In my area in LA the only drops that I've seen are management companies offering a month or so free, to keep up base rent at full price. Maybe smaller landlords are dropping prices, but it's hard to see much of a trend. I will say when I moved out of my complex into a more private place, my parking lot had like 50% capacity (it used to be full before the pandemic).

jonahbenton 6y ago

Simple supply and demand is a one-time game model. Property is a repeated, long term subgame component of the much larger repeated long term game that is the financial system. Dynamics are completely different. One example, it makes more sense to give someone 3-6 months free at price $X than to get them in at .5 or .75 $X.

hkmurakami 6y ago
To add to this, player dynamics are quite different between big corporate landlords and small landlords.

thewebcount 6y ago

> wouldn't you also bargain more aggressively with your landlord? It depends on the landlord. If they were reasonable, then yes, I'd bargain with them. If they were total pricks for most of the time I was there, then screw them. I can get my lower rent and hurt them in the process. I'll try that option! (At least, I bet that's the thinking of many people.)

kbenson 6y ago

I agree with this in general. I'm not sure how it bolsters or refutes what I said. The premise I was responding to is that noting change in inventory will show much larger swings if there's relatively few units on the market, and that may be a poor indicator of what's going on. Simplified, it's the difference between a market of 100 units of this 10 are avaiable inventory, and seeing an increase of 3 units (30% raise in available inventory) and a a market of 100 units that has 1 unit available and sees an increase of 2 units (200% increase in available inventory). There was an increase in inventory, and it helps, but probably not as much as 200% would lead one to believe. The article itself noted the latter was the case in SF as there was "unusually low inventory" compared to other cities beforehand. Of course the difference is going to look outsized, in that case. > if the prior non-occupancy rate was very low, you'd expect a shock that doubles the rate (say, 5% -> 10%) to lead to perhaps a larger price change than in a less tight market (such as 10% -> 15%) That depends on so many other factors that I think you can't easily generalize like that for housing. If the inventory is still very low, and now instead of being uber-rich you just need to be very-rich, you're still so constrained in your potential customers that the price range may not change significantly, or if you're still catering to a class of people that do or don't traditionally commute, or if the price is hovering near the break even for a lot of people for commuting vs living local, or whether the work in the area that many of the potential customers does can be done remotely (as these articles are about), etc. Housing is one of the most complicated markets, and there are numerous counterexamples of the exact opposite happening to what you describe

asdff 6y ago

In reality, most landlords will sooner tell you to walk and hold an empty apartment for a year than balk on rent.

diebeforei485 6y ago

Depends. Some landlords are not worth it and it's better to leave. That said, a lot of folks in SF are on month-to-month leases so they can just give a 30-day notice and peace out.