https://www.nbcnews.com/nightly-news/video/skyrocketing-rent…
One man said that his landlord raised his rent to $6,500 a month but if he paid the whole year immediately the rent would be only $6,000 a month – $72,000 a year.
I don’t see how landlords can raise rents if people can’t afford to pay them. Eventually supply and demand has to settle at a realistic level.
Meanwhile, the BLS is saying that rents are rising 5% per year, which is clearly too low.
https://www.bls.gov/cpi/
Wendy
One man said that his landlord raised his rent to $6,500 a month but if he paid the whole year immediately the rent would be only $6,000 a month – $72,000 a year.
I don’t see how landlords can raise rents if people can’t afford to pay them. Eventually supply and demand has to settle at a realistic level.
I saw that report also. It included commentary on the area, Miami IIRC, stating that there had been a large influx of WFH people from out of the area. The demand and ability to pay for the properties have skyrocketed…for now. No doubt they will come back down as it becomes less desirable to live there, (think congestion or inability to get workers for lower paid jobs,) or inventory comes on market.
IP
One man said that his landlord raised his rent to $6,500 a month
I saw that report: for a high rise with an ocean view. Report went on touting double digit percentage point increases in other cherry picked markets. Must keep the hysteria going, no matter what it takes.
I don’t see how landlords can raise rents if people can’t afford to pay them.
Shiny ideology says profit maximization is the only objective, so prices rise to a “market clearing” level.
Eventually supply and demand has to settle at a realistic level.
Daily media inflation hysteria is promoting the thinking “better grab whatever you can, regardless of price, because shortage, Shortage!!, SHORTAGE!!!”, to drive demand, regardless of price.
Steve
Meanwhile, the BLS is saying that rents are rising 5% per year, which is clearly too low.
https://www.bls.gov/cpi/
There are wide variations in rental rates across the country. Austin, Miami, and Raleigh NC get the headlines with outrageous increases. Other cities like San Francisco are actually reporting rent decreases.
County-by county apartment rent price changes.
https://www.washingtonpost.com/business/interactive/2022/ris…
If I still had a need to be employed, I’d be looking to to “work from home” in a low rent area. Even in crapholes like WV and MS, there must be some neighborhood where the “job creators” live that’s tolerable.
intercst
I don’t see how landlords can raise rents if people can’t afford to pay them. Eventually supply and demand has to settle at a realistic level.
They can’t. If this renter doesn’t want to pay $6000-6500 for the ocean view, then they will choose a different apartment, maybe one for $5000 without an ocean view? Or maybe they will buy a condo inland instead?
On the other hand, if the landlord can’t find someone willing to pay $6000-6500, they will very quickly lower the asking rent until they do get a renter willing to pay.
On the other hand, if the landlord can’t find someone willing to pay $6000-6500, they will very quickly lower the asking rent until they do get a renter willing to pay.
Are you suggesting this novel concept called Supply & Demand is at work here?
Pete
On the other hand, if the landlord can't find someone willing to pay $6000-6500, they will very quickly lower the asking rent until they *do* get a renter willing to pay.
That is probably true if the landlord has only a few properties. If the landlord is a large corporation with hundreds or even thousands of apartments, it may be willing to keep the apartment empty for months in order to keep the rents high in the occupied apartments.
That is probably true if the landlord has only a few properties. If the landlord is a large corporation with hundreds or even thousands of apartments, it may be willing to keep the apartment empty for months in order to keep the rents high in the occupied apartments.
I don’t think it generally works that way. Rent almost always only changes upon renewal of the lease. If the person renting there can get a lower price down the street in another building, they may decide to move come renewal time. And, SPECIFICALLY for companies with hundreds or thousands of units, they have people moving out and in every month. And every month they have to set the price necessary to attract enough people to move in to their units instead of the competitor’s unit down the the street. Sure they are willing to leave some units empty, but that is part of general operation that kind of business … they try to do maintenance at that time, painting, repairs, improvements, new appliances, etc.
The only way your statement makes sense is if they own ALL the apartments in the area. And that is very rare. Maybe like an out-of-the-way trailer park or something like that, or owning the only storage unit facility in town.
The only way your statement makes sense is if they own ALL the apartments in the area. And that is very rare. Maybe like an out-of-the-way trailer park or something like that, or owning the only storage unit facility in town.
And specific to that video, while I couldn’t place the exact building, it looks like they’re in a luxury unit in the Brickell neighborhood just south of downtown Miami. Nearly all of those buildings are condominiums, not rental buildings - so they’re exceedingly unlikely to have any kind of uniform rent structure anyway. They’ve also seen selling prices approximately double in the past 18 months, so it’s not shocking that rents would follow suit.
Albaby
That is probably true if the landlord has only a few properties. If the landlord is a large corporation with hundreds or even thousands of apartments, it may be willing to keep the apartment empty for months in order to keep the rents high in the occupied apartments
There’s a “newer” market in town called 30+ day rentals. They became very popular with Covid, due to the traveling nurses industry. Have always been around, but regular landlords are going into this market to maximize profits. Furnished and including utilities, they rent by the unit or by the bedroom. They are the rage where Youngest just moved to for work. Other young professionals like him have been priced out of the conventional rental market, and have to share a unit with a couple of others in the same boat. Fortunately for Youngest, one of the bedrooms is still empty, and the other guy who signed on pretty much hides in his room, so it’s a bit like having the place to himself. We were considering placing the rental we just sold into that market.
A traveling nurse I know was telling me about her new assignment when she leaves here, including housing. She used AirBnBs for this area, but has joined a club that has thousands of high end units available around the country that only members have access to. One guy owns them all, apparently, though I have not verified that. Innovation happens when there is money to be made. The real estate sales market is changing.
IP
Rent almost always only changes upon renewal of the lease. If the person renting there can get a lower price down the street in another building, they may decide to move come renewal time. And, SPECIFICALLY for companies with hundreds or thousands of units, they have people moving out and in every month. And every month they have to set the price necessary to attract enough people to move in to their units instead of the competitor’s unit down the the street.
…
The only way your statement makes sense is if they own ALL the apartments in the area.
Not really. When a rental comes near renewal time, I go onto Zillow to see what the market is leasing properties like mine for. I don’t have to get all the tenants, just one qualified tenant willing to pay my price. I avoid the bottom of the barrel pricing and instead market a property that tenants fight over. If I am pricing the unit for renewal to existing tenants, it is reasonable to give them a discount on market value, since I won’t waste up to a month’s rent, (assuming I use a Realtor,) and a month’s vacancy turning over the unit. In my profit projection spreadsheet I allocate 10% of gross rent per year for vacancies and collections. I’ve never had either.
What Zillow tells me about my competition is how many views and applications have been made at that particular price point. If I see that comparable properties are renting at higher numbers than last year, I up my price. It only takes a few properties going under contract to influence the numbers this way. For example, a friend who has been lulled into lower prices from the decades she’s been in the business recently had a turnover. The agent she decided to use to rent out the property suggested a price of $2,000/month, which I suggested was way too low. The most recent comp in the development, a smaller less upscale unit, was rented for $2,200, with 5 applications renting out on day 1. I pointed out that that meant there were at least 4 applicants that had already decided a lesser quality property than hers was good for them, were likely still looking for a property to rent. She listed it at $2400, still too low IMO, renting it to the first applicant. Rent increased 20% because of small data set on Zillow. Next year could be a different story.
Real estate is complex.
IP
Meant to add, we are in a real estate market where if you ask it, they will pay it. May not last, at least when supply catches up with demand, in which case it’s how low can you go.
Got to live somewhere.
IP
I saw that report also. It included commentary on the area, Miami IIRC, stating that there had been a large influx of WFH people from out of the area. The demand and ability to pay for the properties have skyrocketed…for now. No doubt they will come back down as it becomes less desirable to live there, (think congestion or inability to get workers for lower paid jobs,) or inventory comes on market.
IP
Multi-family residents:
Have you encountered the special circumstances where you have to closely monitor and enforce no excessive occupancy? Like a dozen folks where there should only be four?
Not in the rental biz anymore, but back years ago when, it’s one of the problems that drove me out.
Have you encountered the special circumstances where you have to closely monitor and enforce no excessive occupancy? Like a dozen folks where there should only be four?
We had it spelled out how long a guest could stay, and made sure to tell the neighbors to feel free to reach out to us if the tenants were becoming a problem. Helps that we lived there first, and were friends with many in the neighborhood.
I also came in to the house every quarter to change out the air filter on the HVAC. It not only protected an expensive piece of equipment, which many landlords leave up to the tenant to do, it gave me an opportunity to put eyeballs on the inside of the property regularly.
Most importantly, I don’t do low cost rentals. If someone can afford the 3xrent for income, (after deducting bills from that income,) they didn’t need to stuff extra tenants in. We also insist on a higher credit rating than typical.
IP,
liking properties that tenants fight over, not lowest rent sells it
There’s a “newer” market in town called 30+ day rentals. They became very popular with Covid, due to the traveling nurses industry. Have always been around, but regular landlords are going into this market to maximize profits.
I read an article about this (maybe in Forbes? Maybe online?), apparently it’s becoming somewhat popular in certain areas. I think they described it as “midway between a traditional rental and an airbnb”.
I think they described it as “midway between a traditional rental and an airbnb”.
Rentals over 30 days tends to get past transient rental taxes and doesn’t require special permits. In our city “short term rentals” are anything less than 30 days and can only be done in a primary residence. These get around those laws, which have sprung up in many many cities as short term rentals crowded out long term.
IP