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Is Rent-Pricing Software Hurting the Housing Market?

February 20, 2023

Rise and shine! It's a new day and The Shaker is here to serve you the best mix of residential real estate news. Yummy yummy.

RENTALS

Is Rent-Pricing Software Hurting the Housing Market?

What you should know:

  • Many large property owners use rent-pricing software to figure out what to charge their tenants. However, this practice has come under scrutiny after ProPublica produced an investigative report on the software company RealPage and its rental-pricing algorithm. Several lawsuits have accused RealPage of colluding with landlords to artificially inflate rents and limit the supply of housing. The Department of Justice is also investigating.

  • Critics argue that the algorithm allows competitors to raise their prices simultaneously, inflating prices in the market and limiting housing supply. More than two dozen lawsuits were filed, and the Department of Justice's antitrust division is investigating the potential antitrust violations. Congressional leaders have also expressed concerns about the impact on consumers and urged federal authorities to look into the company more.

  • RealPage claims that their software "uses aggregated market data in a legally compliant manner" and argues that it prevents collusion. However, many leasing agents and tenants are concerned that this approach to setting rent is changing the landlord-tenant relationship in an unhealthy way by taking the human element out of rent setting.

TECH

A Metaverse Mansion and its Virtual Twin - The Latest in Real Estate Trends

The metaverse is becoming a new frontier for real estate builders and investors. An 11,000-square-foot mansion with seven bedrooms and a pool in Pinecrest, Miami, was built in the virtual world of the Sandbox by a construction contractor who paid $10,000 for a digital parcel in the virtual world.

He paid to have the exact same house built in the real world and plans to auction both homes for $10m in March. The Sandbox is one of the most popular metaverse worlds, with parcels of land that can be bought and sold on the blockchain. Metaverse real estate pricing operates on a fixed scale, much like real-world real estate, and is expected to grow by $5.37 billion by 2026.

Takeaways:

  • Metaverse real estate operates on a fixed scale and the market is worth $1.4 billion.

  • Financial transactions are handled in cryptocurrency and powered by the blockchain.

  • Metaverse technology is becoming increasingly immersive, with homes and real estate becoming popular purchases.

  • Land is becoming the infrastructure of the metaverse and its increasing scarcity is driving prices higher.

  • The metaverse market is expected to grow rapidly and be worth $5.37 billion by 2026.

MARKET

Home Sales Slow: Signs of a Cooling Market?

According to a recent report from Redfin, the housing market in the United States has cooled off significantly in the past few weeks.

Takeaways:

  • Homebuyer demand has decreased, with the number of offers made on homes dropping by 20% in January compared to December 2021.

  • The inventory of homes for sale has increased by 5% in the same time period, giving buyers more options to choose from.

  • Mortgage rates have also decreased slightly, making it more affordable for buyers to purchase a home.

  • Despite the cooling off of the market, home prices are still high, with the median sale price for a home increasing by 18% year-over-year in January.

  • The report suggests that the market is still highly competitive in certain regions, but overall, the trend seems to be moving towards a more balanced market, with buyers having more leverage in negotiations.

Overall, the report indicates that the housing market is still experiencing strong demand, but the competition is not as intense as it was a few months ago. Buyers are still facing high prices, but they may have more options to choose from and a better chance of negotiating a better deal.

MARKET

Single-Family Rental Market Experiences Record High Prices

According to a recent report, single-family home rentals in the United States have hit a new record high, and the trend shows no signs of slowing down anytime soon.

Takeaways:

  • Single-family home rentals are increasingly popular: The report found that single-family home rentals now make up a record-high 58.7% of all rental housing in the US, up from just 41.3% in 2005.

  • Rental prices are rising: The demand for single-family homes has caused rental prices to skyrocket. The median rent for a single-family home has increased by 13.3% over the past year, and now stands at $1,994 per month.

  • Some areas are more expensive than others: The report identified the 20 most expensive single-family home rental markets in the US, with California dominating the list. Los Angeles was ranked the most expensive market, with a median rent of $4,046 per month.

  • Millennials are driving the trend: The report suggests that millennials are largely responsible for the shift towards single-family home rentals, as they are choosing to rent rather than buy homes due to factors such as high student debt and a preference for mobility.

  • The trend is unlikely to slow down: With the cost of buying a home continuing to rise, and the rental market becoming increasingly competitive, the trend towards single-family home rentals is expected to continue for the foreseeable future. This means that renters will need to be prepared to pay higher prices, and potentially compete with a larger pool of applicants, in order to secure their desired home.

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