What's triggering massive increases in rents across the country?
Wealthy workers fleeing expensive tech and finance centers, leveraging work-from-home arrangements and moving to cheaper areas but driving up home prices and apartment prices?
Lower and middle income workers benefiting from higher wages and bidding up apartment rents with their new found cashflow?
Or maybe some of the biggest real estate management firms controlling lopsided shares of all apartment units in an area have started using a single software product that leverages big data to optimize rent adjustments, essentially automating the type of pricing described in Econ 101 as inefficient monopolistic behavior.
ProPublica posted a story at https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent describing how software from the firm RealPage called YieldStar promises 4-7 percent higher "yield" for landlords. Using the software, landlords can alter rents on open units in real time while waiting to land the next tenant. In economics pricing theory terms, doing so essentially allows the landlord to set the rent on the next apartment unit at exactly the marginal value of the next most likely buyer, as predicted from data reflecting recent rentals to other tenants.
How pervasive and influential is this approach? Per ProPublica, in one area of Seattle, 70 percent of apartment units are controlled by ten real estate management firms and ALL of those firms use YieldStar. That essentially means those ten firms have perfect information about the willingness to pay of every tenant who moved in or renewed in those units and could adjust individual rents conceptually just up to each tenant's -- ahem -- walkaway point where if it went any higher, the tenant might not rent or renew.
There are federal and state laws that literally prevent per-consumer pricing based on anti-discrimination laws but this software allows landlords to get this ---->||<---- close by pricing all available units at a given point in time at a price that can be optimized daily, which is almost the same thing unless a complex has multiple open units and multiple potential tenants pondering a lease.
In a information-driven economy, beware of parties leaping to old conclusions about the causes of economic issues -- unproductive workers, printing money, deficit spending, entitlement programs, etc. The causes may very well stem from new exploitive "efficiencies" that are further squeezing supply chains and shifting "economic rents" to the alpha players in the economy. In this case, literally.
WTH
