Adjusted for inflation, that $700 rent would be $1,242 today. Not quite enough to get it all the way to the $3,600 they are quoting today. There’s something else very funky going on right now. A lot of cities are experiencing massive population loss… yet rental costs continue to rise. I’m sure the housing crisis has a large part to play in that, but it still doesn’t make a lot of sense to me.
I think part of it is because of pricing software like RealPage.
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.”
I lived in a building that used this software. In 6-7 years, rent went from around $1200 to about $2,000. More and more apartments stayed empty. They kept raising prices during the pandemic. Surprise surprise, a tent city popped up down the street. A couple people died there.
My two cents on this is that, the same house developers own a shitload of buildings in each city, meaning they basically up the prices quite a lot without competition to undercut them.
How we solve this goes from country to country.
In case of the US I’d say something must be done, either build more, or adjust economy in order to the middle class to be able to purchase in cities again.
In my country the issue is close to being the same, the main difference is that state regulation isn’t helping at all either, causing people who have properties to not even rent at all.
Rent incomes are taxed at 28%, plus the “IMI”, which is a yearly tax the Portuguese pay on properties, and the owner doesn’t even profit enough to pay for the damages usually caused by the renter. So they either up the prices like crazy (average rental in Lisbon is about 800€), or don’t even rent at all.
Edit: I have people in my family that inherited houses from deceased family and tried to rent it. The renters stole all the furniture, house applicances, everything, from 6 months paid only 2 and after being kicked out even came back to break into the house. Police had to be called to solve the issue but their hands are also tied so they can only give empty threats. Guess who’s never renting again.
In case of the US I’d say something must be done, either build more, or adjust economy in order to the middle class to be able to purchase in cities again.
Building more doesn’t solve the problem. There is vacant real estate already. If you don’t have a tenant for a property, you’re operating at a loss. A loss is a tax write off. With some creative accounting, it might be better to keep a place empty and increase the rate no one will pay you.
My solution is to devalue money.
A network of businesses and merchants that based on income, estate assets, and their contribution to the wield as recognized by the network, add a fee or a discount.
If you are living up to your potential doing good things, you can afford to spend less. If you have no income, but you are doing good to your abilities, potentially all basic needs are covered.
If you are hording value and causing harm, then you pay additional fees.
Combined, the fees cover the discounts. The economic gap grows smaller.
It would be massively more simple, and more profitable to government, to simply levy a colossal tax on property owners who leave their rental properties empty for more than six months or so.
Ah, they’re trying that in Portugal. It doesn’t work. They’re going even as far as expropriation the houses from the owner, forcing them to rent at state agreed rates.
My wild guess? The only solution is reducing inflation to the negative to make money more valuable.
Deflation can be even more destructive than inflation. It would basically make all kinds of debt more expensive, to which real estate is particularly sensitive. There’s a chance that could force over leveraged property owners to sell, but with more expensove debt, there will be fewer buyers and it would tend to be those who can take on the higher risk (aka the already wealthy).
All that is to say, I don’t have a solution either (especiallly if high taxes on non-dwelling properties doesn’t seem to be making an impact), but deflation is almost never good…
Taxing more isn’t the solution, believe me there are countries trying that without success. The solution would probably revert the inflation we’ve been having for decades now, to make the money more valuable.
It’s not inflation and it isn’t taxation. It would be closer to deflation. However, what I’m suggesting would be a free market program. Businesses would join it and there could be incentives for the customers to do business in this affiliated network. The point is to make it so that social and societal value is more important than bank statements.
In Canada, we don’t seem to have anyone trying to solve it. We have a housing minister who promises to make housing affordable without lowering existing home values. Can’t do one without the other…
Vancouver runs an average of 3800 for a two bedroom apt. Not a luxury suite. A standard, 90-00s era decor apartment.
Adjusted for inflation, that $700 rent would be $1,242 today. Not quite enough to get it all the way to the $3,600 they are quoting today. There’s something else very funky going on right now. A lot of cities are experiencing massive population loss… yet rental costs continue to rise. I’m sure the housing crisis has a large part to play in that, but it still doesn’t make a lot of sense to me.
I think part of it is because of pricing software like RealPage.
I lived in a building that used this software. In 6-7 years, rent went from around $1200 to about $2,000. More and more apartments stayed empty. They kept raising prices during the pandemic. Surprise surprise, a tent city popped up down the street. A couple people died there.
My two cents on this is that, the same house developers own a shitload of buildings in each city, meaning they basically up the prices quite a lot without competition to undercut them.
How we solve this goes from country to country.
In case of the US I’d say something must be done, either build more, or adjust economy in order to the middle class to be able to purchase in cities again.
In my country the issue is close to being the same, the main difference is that state regulation isn’t helping at all either, causing people who have properties to not even rent at all.
Rent incomes are taxed at 28%, plus the “IMI”, which is a yearly tax the Portuguese pay on properties, and the owner doesn’t even profit enough to pay for the damages usually caused by the renter. So they either up the prices like crazy (average rental in Lisbon is about 800€), or don’t even rent at all.
Edit: I have people in my family that inherited houses from deceased family and tried to rent it. The renters stole all the furniture, house applicances, everything, from 6 months paid only 2 and after being kicked out even came back to break into the house. Police had to be called to solve the issue but their hands are also tied so they can only give empty threats. Guess who’s never renting again.
Building more doesn’t solve the problem. There is vacant real estate already. If you don’t have a tenant for a property, you’re operating at a loss. A loss is a tax write off. With some creative accounting, it might be better to keep a place empty and increase the rate no one will pay you.
My solution is to devalue money.
A network of businesses and merchants that based on income, estate assets, and their contribution to the wield as recognized by the network, add a fee or a discount.
If you are living up to your potential doing good things, you can afford to spend less. If you have no income, but you are doing good to your abilities, potentially all basic needs are covered.
If you are hording value and causing harm, then you pay additional fees.
Combined, the fees cover the discounts. The economic gap grows smaller.
It would be massively more simple, and more profitable to government, to simply levy a colossal tax on property owners who leave their rental properties empty for more than six months or so.
Ah, they’re trying that in Portugal. It doesn’t work. They’re going even as far as expropriation the houses from the owner, forcing them to rent at state agreed rates.
My wild guess? The only solution is reducing inflation to the negative to make money more valuable.
Deflation can be even more destructive than inflation. It would basically make all kinds of debt more expensive, to which real estate is particularly sensitive. There’s a chance that could force over leveraged property owners to sell, but with more expensove debt, there will be fewer buyers and it would tend to be those who can take on the higher risk (aka the already wealthy).
All that is to say, I don’t have a solution either (especiallly if high taxes on non-dwelling properties doesn’t seem to be making an impact), but deflation is almost never good…
Yeah I understand the effect of deflation… Other solution would be increasing people’s wages by like 300%<…
Isn’t that inflation?
Taxing more isn’t the solution, believe me there are countries trying that without success. The solution would probably revert the inflation we’ve been having for decades now, to make the money more valuable.
It’s not inflation and it isn’t taxation. It would be closer to deflation. However, what I’m suggesting would be a free market program. Businesses would join it and there could be incentives for the customers to do business in this affiliated network. The point is to make it so that social and societal value is more important than bank statements.
In Canada, we don’t seem to have anyone trying to solve it. We have a housing minister who promises to make housing affordable without lowering existing home values. Can’t do one without the other…
Vancouver runs an average of 3800 for a two bedroom apt. Not a luxury suite. A standard, 90-00s era decor apartment.
It’s a financial bubble.
It’s because the home owners think, if they charge too little, they won’t be taken seriously.