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Because property management companies are colluding to raise rents even if it results in more vacancies. https://www.propublica.org/article/yieldstar-rent-incr

Because property management companies are colluding to raise rents even if it results in more vacancies. https://www.propublica.org/article/yieldstar-rent-increase-realpage-lawmakers-collusion https://www.propublica.org/article/yieldstar-rent-increase-r...

deleted 4y ago
[deleted]
whimsicalism 4y ago
This is not a significant phenomenon driving rent increases. You make more money if you defect from this arrangement and real estate holdings remain diversified in America.
- davidw 4y ago
  People want a boogeyman so badly https://twitter.com/PEWilliams_/status/1610126249938092033 https://twitter.com/PEWilliams_/status/1610126249938092033
  - LynxInLA 4y ago
    I may be misunderstanding the chart, but it says it misses cash offers on second home purchases. All-cash purchases are on the rise since 2008, so that seems like a pretty large segment that isn't represented.
- bell-cot 4y ago
  If a landlord's vacancy rate is lower than the "don't defect" rent increase, then he makes more money by not defecting. Also - setting rent in a given market is a game that the same landlords play with each other, annually. Strategy is different in multi-round games. And - back in the 1990's, I knew a few residential landlords in a mid-sized college town. They clearly said that they got together annually, and decided how much to increase their rents.
  - whimsicalism 4y ago
    I don't agree that rental markets can be modeled as an annual multi-round game/sequential auction and would love a cite and how that proves collusion in these markets.
- WoahNoun 4y ago
  Not if the group colluding collectively control the vast majority of the market. (>70% in some Seattle neighborhoods are colluding with this software.)
  - whimsicalism 4y ago
    70% in one neighborhood when only counting apartments with more than 10 units (the vast minority of units). Not good, certainly, but absolutely in no way driving the current rental crisis.
    - WoahNoun 4y ago
      It's multiple neighborhoods all next to each other in Seattle. They are absolutely contributing to the rental crisis in Seattle proper.
      - zachthewf 4y ago
        I just rented an apartment in Seattle and was surprised by the apparently high vacancies (many units in buildings we looked at were not rented but also not on the market). Would love to learn more about this software.
- mrguyorama 4y ago
  Half of the large apartment complexes in my city are owned by the same corporation. They don't even have to collude to set rent, because they are all the same entity.
  - whimsicalism 4y ago
    What city?
josephcsible 4y ago
Isn't it only profitable to do that in areas with rent control?
jacurtis 4y ago
This is happening in my area. We have insane vacancies right now. It was nearly impossible to get an apartment in 2020 and 2021. But now my current complex is well under 50% full. I see 2-3 people moving OUT every weekend and I've seen only 3-4 people move in since Spring 2022. But the complex is still insisting on raising rents. I've looked at homes that have been available for Rent for over 4-6 months and they are refusing to negotiate or lower rents. They could have already been halfway through a year long lease on places and they are refusing to rent in order to get an extra few hundred a month in rent and drive up the market. People are packing up and going elsewhere. New buildings are being built like mad all around us, and I don't know where they expect these people to come from that will pay their high prices. The smaller property management companies are dropping prices like crazy to get vacancies filled, but the large ones are holding strong with high rents. They have probably been banking absurd rents for the past two years and can afford to sit on these homes long enough now if they can keep getting high rents. But jokes on them, inventory is getting too high. My rent went up 30% in 2021, and went up another 10% last year. They are now asking for another 5% increase this year. I make good money, but I am effectively paying 50% more money for a home thats half the size of what I used to have. I can work anywhere in the country, so I'm not playing this game and I think many others are in the same boat.
- zachthewf 4y ago
  What area is this?
- Firmwarrior 4y ago
  Haha, the same thing happened to me during the pandemic in the SF Bay area. Corporate policy was to raise rents and NEVER negotiate them at all. The building pretty much cleared out. Meanwhile, I rented a much larger, nicer place for much cheaper from a local human being who values me as a customer.
- readonlybarbie 4y ago
  [dead]
- notch656c 4y ago
  Living in a half occupied building is IMO a luxury compared to a full building (fewer neighbors, less people for noise pollution, less congestion in hallways and public areas etc), so it makes sense it would command a premium in rent.

deleted 4y ago

[deleted]

whimsicalism 4y ago

This is not a significant phenomenon driving rent increases. You make more money if you defect from this arrangement and real estate holdings remain diversified in America.

davidw 4y ago
People want a boogeyman so badly https://twitter.com/PEWilliams_/status/1610126249938092033 https://twitter.com/PEWilliams_/status/1610126249938092033
- LynxInLA 4y ago
  I may be misunderstanding the chart, but it says it misses cash offers on second home purchases. All-cash purchases are on the rise since 2008, so that seems like a pretty large segment that isn't represented.
bell-cot 4y ago
If a landlord's vacancy rate is lower than the "don't defect" rent increase, then he makes more money by not defecting. Also - setting rent in a given market is a game that the same landlords play with each other, annually. Strategy is different in multi-round games. And - back in the 1990's, I knew a few residential landlords in a mid-sized college town. They clearly said that they got together annually, and decided how much to increase their rents.
- whimsicalism 4y ago
  I don't agree that rental markets can be modeled as an annual multi-round game/sequential auction and would love a cite and how that proves collusion in these markets.
WoahNoun 4y ago
Not if the group colluding collectively control the vast majority of the market. (>70% in some Seattle neighborhoods are colluding with this software.)
- whimsicalism 4y ago
  70% in one neighborhood when only counting apartments with more than 10 units (the vast minority of units). Not good, certainly, but absolutely in no way driving the current rental crisis.
  - WoahNoun 4y ago
    It's multiple neighborhoods all next to each other in Seattle. They are absolutely contributing to the rental crisis in Seattle proper.
    - zachthewf 4y ago
      I just rented an apartment in Seattle and was surprised by the apparently high vacancies (many units in buildings we looked at were not rented but also not on the market). Would love to learn more about this software.
mrguyorama 4y ago
Half of the large apartment complexes in my city are owned by the same corporation. They don't even have to collude to set rent, because they are all the same entity.
- whimsicalism 4y ago
  What city?

josephcsible 4y ago

Isn't it only profitable to do that in areas with rent control?

jacurtis 4y ago

This is happening in my area. We have insane vacancies right now. It was nearly impossible to get an apartment in 2020 and 2021. But now my current complex is well under 50% full. I see 2-3 people moving OUT every weekend and I've seen only 3-4 people move in since Spring 2022. But the complex is still insisting on raising rents. I've looked at homes that have been available for Rent for over 4-6 months and they are refusing to negotiate or lower rents. They could have already been halfway through a year long lease on places and they are refusing to rent in order to get an extra few hundred a month in rent and drive up the market. People are packing up and going elsewhere. New buildings are being built like mad all around us, and I don't know where they expect these people to come from that will pay their high prices. The smaller property management companies are dropping prices like crazy to get vacancies filled, but the large ones are holding strong with high rents. They have probably been banking absurd rents for the past two years and can afford to sit on these homes long enough now if they can keep getting high rents. But jokes on them, inventory is getting too high. My rent went up 30% in 2021, and went up another 10% last year. They are now asking for another 5% increase this year. I make good money, but I am effectively paying 50% more money for a home thats half the size of what I used to have. I can work anywhere in the country, so I'm not playing this game and I think many others are in the same boat.

zachthewf 4y ago
What area is this?
Firmwarrior 4y ago
Haha, the same thing happened to me during the pandemic in the SF Bay area. Corporate policy was to raise rents and NEVER negotiate them at all. The building pretty much cleared out. Meanwhile, I rented a much larger, nicer place for much cheaper from a local human being who values me as a customer.
readonlybarbie 4y ago
[dead]
notch656c 4y ago
Living in a half occupied building is IMO a luxury compared to a full building (fewer neighbors, less people for noise pollution, less congestion in hallways and public areas etc), so it makes sense it would command a premium in rent.