If you’re on the hunt for a new apartment, you’re well aware of the current conditions in the marketplace. For several reasons, demand for rental housing is growing across the country, particularly in urban areas as many recent graduates, young families, and empty-nesters move back into cities. Higher demand is good news for landlords who love low vacancy rates.
To help landlords get the best price for their rental, many landlords have begun using a dynamic pricing software – think Priceline.com for property owners – which bases rates on real-time supply and demand. If demand is high, it alerts the landlord to charge higher rent on vacant units. Once demand slows, it suggests a drop in rates. The software, which has been around for more than a decade, is now being adopted by an increasing number of landlords across the country. Dynamic pricing is now used to determine the rent of roughly 5 million apartments, or 30% of rentals handled by property managers, according to a story by CNN. Two years ago, it’s estimated that just 10% of those apartments’ rents were based on this model.
Proponents of dynamic pricing claim that the software helps landlords remain objective and keeps emotions out of the equation. Additionally, the software can be used to manage lease renewals and better enables landlords to comply with the Fair Housing act by providing consistent quotes for all prospective tenants.
What are your thoughts on this type of software? Does it benefit the tenant – who pays a fair market value based on supply and demand – the landlord or both parties? Leave your comments below.
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