Until then, sub-95% occupancy was a sign of property failure. Now, rents and rental properties have been so thoroughly captured and coordinated that large property management companies are able to profit at occupancy rates below even 80%. It was organized, aggressive, large-scale exploitation of historical "rules of thumb" of property pricing (not just rentals), laundered through software.
The problem is circular. Artificially high rental prices drove many to buy houses, and median home price and availability in a given area generally determine rental prices. By using profits to capture multifamily dwellings and raising their prices to control their occupancy, valuations on surrounding residential properties (many owned by the same large, PE-backed commercial hard asset investors) could be raised beyond the traditional limits that a local market would bear. Like Broadcom, they raised rates to "fire" their least profitable customers.
Property management companies that used rental price-fixing software flourished, and both existing home owners [1], and cities were loathe to complain. For home owners, this has been the closest they've ever gotten to a bailout in their lifetimes. For cities, tax revenues are higher than ever.
Who amongst them would dare call it all a sham?
[1] I originally wrote "who at worst were unaffected", but that's demonstrably untrue. We normally criticize it as "gentrification", but at least as far back as 2012, I noted investors in my area were buying up minority communities, flipping the houses into rentals to raise property values, buying the properties people could no longer afford the taxes on, and then renting them back to them at more than the cost of their original mortgages.
A single apartment wont have that effect, but when most landlords does that then the value of their assets will go up, and that value increase will probably outpace any lost rent income.
Then, other properties also go on the market much higher as they see this is now 'the market rate'.
The higher quality properties go early. The poor quality ones stay - with the higher pricing.
In the UK, it is an absolute racket without any protection for the tenant. Including ANY annual increase in rent - and people can be kicked out with just 2 months notice (including where I rent, as a family of 3).
>[...] in the hope that you can squeeze an extra 100 every month [...]
Which one is it? Was the increase "substantial" or was it only 100 bucks?
> I'm not a landlord but I don't think there is a rational basis for kicking all of your rent paying tenants out and then having half a dozen units go empty in the hope that you can squeeze an extra 100 every month out of someone, maybe, in the future.
Hindsight is 20/20. My guess is that the landlord thought the market was going to bear the price increase, and went all-in on it rather than only doing it on a portion of his tenants.
A 100 increase over 800 is a 12.5% increase, which is substantial relatively speaking. In my case they wanted 150 over 800 which is an 18.75% increase. After I said no (as well as everyone else in the complex) they wanted 1000 which is a 20% increase. I have to say your comment comes off as condescending to me. For many people $100 may be the difference between being able to afford a home and being homeless. Now everyone has left, the units are all empty, and they are asking for 800 (after asking 950, then 900, then 850).
> Hindsight is 20/20. My guess is that the landlord thought the market was going to bear the price increase, and went all-in on it rather than only doing it on a portion of his tenants.
That is one way to describe it. Or, to describe what you said in other words, trying to squeeze every penny out of tenants, creating an inconvenience for five people (who would have probably rather stayed and put up with a modest 2-5% increase), then losing money after all because all of the properties are now vacant.
Not OP, but here is how I interpreted this.
Increase rents substantially -> no one takes it -> decrease rents over time until it hits a rate the market can bare -> people move in when rents are 100 dollars above what the previous tenets were paying.
At the end of the auction the existing tenants are offered to renew at the winning price first (maybe with some discount to cover the cost of switching tenants). If they don't want to pay that, then it is offered to the auction winner.
I don't think it would work if the auction itself binds you into the rental contract, as you probably want to bid on multiple properties so you have another option if you don't win.
Does anyone know in general why rental properties aren't negotiated further in advance? When I was renting this was actually the biggest issue - when you are struggling to find a place and you have 2 weeks to do it.
[1] https://www.nytimes.com/2024/07/19/business/economy/rent-pri...
Its old fashion collusion. Using the word algorithm obfuscates the simplicity in the criminal activity.
Is that part of the legal requirements for a guilty judgement or breaking up a cartel? In the US at least? Would RealPage be fine if they treat their recommended prices as mere suggestions?
I don't control prices. That is supply and demand.
Software that looks at rents in area and suggests a price just sounds like automation of what I do manually.
If you looked at the rents, put yours at slightly higher than average and then strong armed the owners of the majority of similar units to do the same even if your vacancy rate goes up so that now yours is right at the new average, then it would be similar to real page.
