Rents are way outpacing inflation according to the latest data from the Census Bureau, making this an ideal time to buy if you plan to stay put for 5 years or more.
The average rent is up by just about 20% on average around the country at a time when there's no meaningful inflation in the economy to speak of.
In addition, the latest numbers show that 20 million households are paying more than 30% of their income for rent, which is a big amount by historical standards.
Part of the big increase is because of what's called dynamic demand pricing.
Airlines have long used dynamic demand pricing (aka yield management) to determine the price of seats on flights. With dynamic demand pricing, the airlines use historical analysis, behavioral patterns of buyers, the rate of bookings, and even unemployment rates plus any other number of factors to control the price per seat. No two seats are sold for the same price.
Now the property managers are taking a cue from the airlines. If you are a renter coming up for renewal, or you are looking for a place to rent, be aware that you could go to a rental complex on three different days and get three different rents on the same apartment each time! The value of that apartment changes as often as every 24 hours based on market conditions in the area and what's going on in that complex.
For example, let's say two tenants unexpectedly give notice that they're leaving. Suddenly, the property manager has more inventory than planned. The software will then trigger a special to fill up those vacancies.
The key point to know is that the larger the complex you're shopping, the more likely it is that the price is not the price and can continually change. So shop methodically and keep a list of quotes. Checking back several times for new quotes will make a big difference in what you have to pay for rent.
Know too that rents may be different even on the same floor plan, depending on location in a given complex. One strategy might be to look for a less desirable unit that meets your square footage needs to save money.
- 6 weeks out before your current lease is up, go shop the market.
- Shop what's called the shadow market with involuntary landlords who have a house or condo they've decided to rent because they can't afford to sell it at a loss.
- If there's one complex you just love, but it's too expensive, check the price once or twice a week. Pricing can change that much.