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One thing I don't understand is why housing prices are not falling. When you are a landlord and the home doesn't rent, my first instinct would be to lower the p

One thing I don't understand is why housing prices are not falling. When you are a landlord and the home doesn't rent, my first instinct would be to lower the price until people start showing up, yet this doesn't appear to be happening. Even the opposite, landlords would rather kick someone out that can't afford a hike in rent prices than to keep prices at the same level. To me it seems better to have a lower income occupied property than a high income but non-occupied property (effectively making the income 0, and with upkeep cost making it a net expense). Maybe there's some kind of mechanism I don't see because I'm not a landlord myself. How do landlords get the money to bridge the periods their properties are vacant?

ceejayoz 3y ago
In some cases: automated quasi-legal collusion. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r... > On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company’s signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants. > “Never before have we seen these numbers,” said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company’s services. Turning to his colleague, Parsons asked: What role had the software played? > “I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.” > Camden’s turnover rates increased about 15 percentage points in 2006 after it implemented YieldStar, Campo, the company’s CEO, told a trade publication a few years later. But that wasn’t a problem for the firm: Despite having to replace more renters, its revenue grew by 7.4%.
- DonsDiscountGas 3y ago
  > I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive I don't know why one should believe this just because this guy says it. His customers are landlords, of course he's going to say that his product helps them make more money.
  - ceejayoz 3y ago
    There's more article than my short excerpt; I'd encourage you to read it.
DonsDiscountGas 3y ago
Presumably most landlords do behave exactly as you say. But if property values are increasing quickly then the landlord is getting money there, rather than rent, and the value of rent becomes relatively smaller. Also when a property is vacant the only real upkeep cost is property tax, which is pretty small (just tax land [0]!). You still have the opportunity cost of not renting, but if rents are also increasing fast then keeping a property empty for longer makes sense so you don't get stuck in a long-term lease at a low rent. Dunno how true this is, but anecdotally I notice commercial properties staying vacant for longer, presumably because they operate on long-term leases. [0] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
HDThoreaun 3y ago
Vacancy rates are quite low. Don't have national numbers but in nyc they're below 4%. Getting below 3% is pretty much impossible due to repairs and people moving so I would say landlords having vacant units is not a problem right now.
csomar 3y ago
> One thing I don't understand is why housing prices are not falling. 1. There is still lots of money out there. Unfortunately for Jerome, getting it out is way harder than pumping it. It might take years. 2. Lots of people are locked in low fixed-rates mortgages that they'd exit if they can refinance at the same rate. This makes the market non-liquid and keeps the prices artificially high even though the volume are down. > When you are a landlord and the home doesn't rent, my first instinct would be to lower the price until people start showing up, yet this doesn't appear to be happening. Most people in the US use a rental agency. These are greedy and sneaky people. That being said, rents are down in most of the US. The market is correcting but it came from a very high place.

ceejayoz 3y ago

In some cases: automated quasi-legal collusion. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r... > On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company’s signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants. > “Never before have we seen these numbers,” said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company’s services. Turning to his colleague, Parsons asked: What role had the software played? > “I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.” > Camden’s turnover rates increased about 15 percentage points in 2006 after it implemented YieldStar, Campo, the company’s CEO, told a trade publication a few years later. But that wasn’t a problem for the firm: Despite having to replace more renters, its revenue grew by 7.4%.

DonsDiscountGas 3y ago
> I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive I don't know why one should believe this just because this guy says it. His customers are landlords, of course he's going to say that his product helps them make more money.
- ceejayoz 3y ago
  There's more article than my short excerpt; I'd encourage you to read it.

DonsDiscountGas 3y ago

Presumably most landlords do behave exactly as you say. But if property values are increasing quickly then the landlord is getting money there, rather than rent, and the value of rent becomes relatively smaller. Also when a property is vacant the only real upkeep cost is property tax, which is pretty small (just tax land [0]!). You still have the opportunity cost of not renting, but if rents are also increasing fast then keeping a property empty for longer makes sense so you don't get stuck in a long-term lease at a low rent. Dunno how true this is, but anecdotally I notice commercial properties staying vacant for longer, presumably because they operate on long-term leases. [0] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax

HDThoreaun 3y ago

Vacancy rates are quite low. Don't have national numbers but in nyc they're below 4%. Getting below 3% is pretty much impossible due to repairs and people moving so I would say landlords having vacant units is not a problem right now.

csomar 3y ago

> One thing I don't understand is why housing prices are not falling. 1. There is still lots of money out there. Unfortunately for Jerome, getting it out is way harder than pumping it. It might take years. 2. Lots of people are locked in low fixed-rates mortgages that they'd exit if they can refinance at the same rate. This makes the market non-liquid and keeps the prices artificially high even though the volume are down. > When you are a landlord and the home doesn't rent, my first instinct would be to lower the price until people start showing up, yet this doesn't appear to be happening. Most people in the US use a rental agency. These are greedy and sneaky people. That being said, rents are down in most of the US. The market is correcting but it came from a very high place.