If you’re a renter, you’re probably well aware that rents have been increasing a lot recently. But what you might not know is that your landlord may be using a tool that helps them do it. According to a recent article published by The Real Deal, some landlords have been using software with an algorithm designed to help them set rents.
At face value, that’s not a bad thing. There are tools to help homeowners get a sense of how much their home is worth, so what’s the big deal with landlords having something to help them figure out how much rent they can get?
Overall, the platform is meant to give landlords insight into what other landlords are getting for their rental units, so it’s really just showing them the market rates. The landlords don’t even have to use the recommended pricing that the software suggests. However, a reported 90% of them do. But the bigger issue for renters is that the platform is said to advise owners that they’re better off leaving a property vacant, rather than bargain with tenants and take lower rents.
That said, landlords have every right to get as much for their rental as possible. If there are renters who are ready, willing, and able to pay them what they’re getting per month, then the market has spoken, and that is ultimately what defines and creates the market value.
The good news is, you might be able to buy your own home and pay less per month than you do in rent!
People often presume that buying a home will cost them more than renting. It certainly can, but it doesn’t always. A lot depends upon:
- Where you live
- What’s available to purchase
- How much homes sell for in your area
- How much rents are in area
It’s not a no-brainer. You have to look into those things. But most likely you won’t be able to buy just any house on the market and have it cost you less per month than something you could rent in the area. That’s not how it works. For instance, you’re probably not going to be able to buy a 4-bedroom, 3-bath colonial on a cul de sac for less than it costs you to rent a 2-bedroom, 1-bath apartment. But, you might be able to find a 2 bedroom, 1 bath condo or co-op that’ll cost you less per month than that apartment!
In fact, according to recent monthly rental market data from Redfin, there’s a pretty good chance you can find a condo or co-op that’ll cost you less to own per month than it would to rent one! While other types of property cost more per month to own than to rent, condos and co-ops are about $200 cheaper per month to own on average on a national level. And that’s not just right now; it has been cheaper to own a condo — by even more than that at times — going back to at least April of 2019.
Image credit: Redfin
Again, real estate values and markets function on a local level, so you can’t entirely bank on national statistics. But they’re at least a good indication that there are possibilities worth looking into if your rent is creeping higher, and you’d like to have some control over how much you’re shelling out every month for a place to live! In the least, it’s worth asking your local real estate agent to help you figure out if there are condos (or perhaps even another type of home) for you to buy, that’ll cost you less per month than your current rent.
If you’re feeling like rent prices are skyrocketing, you’re not imagining things. While they’re driven by supply and demand in the market, some landlords are also using software that helps them not only determine how much they can get for rent, but also encourages them to avoid bargaining with renters and to be firm on higher monthly rental rates.
The good news is that you might be able to buy your own condo or co-op, and pay less per month than you would in rent, based upon national rental market data. Reach out to your local real estate agent for a more accurate assessment of the options and possibilities in your area.