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It sounds like your model assumed all apartments would be the same price for the same unit. But that isn't how the real world works. You start with the high r

It sounds like your model assumed all apartments would be the same price for the same unit. But that isn't how the real world works. You start with the high rent and then come down as it sits vacant. Different units in the building with the same amenities might rent for different amounts. If your rent is $2000 and no one will come in, it makes sense to drop your rent to $1850 if it gets someone in now, because at the end of the year you'll break even vs sitting just one extra month vacant at $2000. The main reason that doesn't happen in NYC in particular is rent control/stabilization -- dropping the rent lowers your baseline. In most cities, you can make up that rent with an increase at the end of the year. But not in NYC. So landlords are incentivized to keep units empty.

lozenge 3y ago
Actually, one of the controversial of RealPage rent price fixing software is it encourages landlords to keep units empty to reduce supply. https://www.propublica.org/article/realpage-accused-of-collusion-in-new-lawsuit https://www.propublica.org/article/realpage-accused-of-collu...
ploxiln 3y ago
> The main reason that doesn't happen in NYC in particular is rent control/stabilization -- dropping the rent lowers your baseline. I was in a few "rent stabilized" apartments in NYC over the years, they always had a clause in the contract that "the official price is $1750, but there is a rebate so you will pay $1450" or something like that. After you move out, regardless of the state of the apartment, they spend 2 weeks painting it. This is required to be able to maximize the increase in the "official price" ... though that seemed completely independent of the lower market price. (That was the case 6+ years ago, I've been in slightly more expensive apts since.)
- chimeracoder 3y ago
  This has been illegal for several years. Now, rent increases for both new and existing tenants are based on the rent actually paid (the preferential rent).
Tade0 3y ago
> You start with the high rent and then come down as it sits vacant My experience in recent years is that what you really do is something akin to a casting combined with a (not advertised) auction and select your tenant based not only on price, but estimated probability of trouble and being late on rent, so religious college freshmen are high on the list, while single mothers on the other end. You don't want to do this every month, so you set the price high enough for some people to self-select.
- nothercastle 3y ago
  Not legal btw but impossible to enforce. Small landlords will do this, big ones just run the algorithm

lozenge 3y ago

Actually, one of the controversial of RealPage rent price fixing software is it encourages landlords to keep units empty to reduce supply. https://www.propublica.org/article/realpage-accused-of-collusion-in-new-lawsuit https://www.propublica.org/article/realpage-accused-of-collu...

ploxiln 3y ago

> The main reason that doesn't happen in NYC in particular is rent control/stabilization -- dropping the rent lowers your baseline. I was in a few "rent stabilized" apartments in NYC over the years, they always had a clause in the contract that "the official price is $1750, but there is a rebate so you will pay $1450" or something like that. After you move out, regardless of the state of the apartment, they spend 2 weeks painting it. This is required to be able to maximize the increase in the "official price" ... though that seemed completely independent of the lower market price. (That was the case 6+ years ago, I've been in slightly more expensive apts since.)

chimeracoder 3y ago
This has been illegal for several years. Now, rent increases for both new and existing tenants are based on the rent actually paid (the preferential rent).

Tade0 3y ago

> You start with the high rent and then come down as it sits vacant My experience in recent years is that what you really do is something akin to a casting combined with a (not advertised) auction and select your tenant based not only on price, but estimated probability of trouble and being late on rent, so religious college freshmen are high on the list, while single mothers on the other end. You don't want to do this every month, so you set the price high enough for some people to self-select.

nothercastle 3y ago
Not legal btw but impossible to enforce. Small landlords will do this, big ones just run the algorithm