The Rents are Bananas!

Affordability Housing Living Rent Rent Wade's World

            Marble Falls     Dwellsy is one of those Silicon Valley startups, we read about constantly.  The niche they are trying to carve out in the market I would describe as something along the lines of being the Zillow for rental properties, the “be all and end all” source for tenants looking to rent apartments or homes, in the same way Zillow and others have carved out the space for people who are looking to buy homes.  Their business model seems to be to get landlords, big or small, to list as many properties as possible, so that they can create a large pool of available rental units.  They list pages of rental associations in various cities as their partners.  I don’t know but they likely monetize their operation by ads from landlords.  For the tenants, they tout a Dwellsy badge of the Good Housekeeping Seal of Approval type and, like most web application startups, it’s free to search for a place on their site in your city or state.

With some 13 million listings, they are trying to get the word out so that tenants start coming to their site, which led them unwittingly to me, offering their co-founder Jonas Bordo to visit on the radio with Wade’s World.  The whole Dwellsy thing was sort of blah-blah to me, what do I know, but Bordo’s pitch people had caught my eye by sending pages and pages of charts from their data, detailing what was happening in rental markets around the country.  Now, that’s interesting, and Bordo was a fount of information.

Disturbingly, they find that “the year-over-year increase in median asking rent has risen by 27.9%, with prices rising steadily since November 2021.”  At the end of August, landlords were trying to get $2350 for a single-family home and $1675 for an apartment in median monthly rents.  The most expensive large cities were many that you would suspect with a heavy batch in California, Boston, and New York, but Miami and poor Tampa, now semi-battered by Ian, were on the list along with Denver, and, surprisingly to me, Austin, in the #5 slot.  Among the small cities, California was well represented, but so was Colorado.  Bordo had to tell me where Silverthorne, Colorado was, because that was a new town to me, and I pride myself about nothing something about that state.  Turns out, it’s a skiing mecca of sorts.  Who knew?

I wasn’t too happy to see Fort Collins-Loveland, Colorado on that list in the #8 position, having experienced a 70.6% increase in the last year, almost doubling the next highest.  That’s in smaller metro areas, but when looking at all of the top ten metros with the fastest climbing rents from August 2021 to August 2022, Greely, Colorado and Fort Collins, Colorado were #7 and #8 on that list.  Kersey, Colorado, one of our new FCC radio noncommercial licenses is smackdab in that area, so my eyeballs jumped out reading seeing those numbers.

Rents for single-family homes saw the highest asking prices per month, all over $3000, in Texas, California, and Florida.  Bordo and I went back and forth a bit on how much of this was being driven by private equity’s entry into this market since the Great Recession.  He made the point that they still only had a miniscule piece of the market, not much more than 1%, but didn’t disagree that they were market movers in some cities.

He also argued that they added rental units to the market, which seemed like finding a silver lining in the clouds, but he’s all about rentals, so his point made perfect sense on that score.  Thinking about expanding available units in the market and the timelines and obstacles for development, especially in affordable rental units, I asked him, given office vacancies, if he thought any developers would seize on retrofitting unused space for rental apartments.  He thought there was some interest, but it’s not a tidal wave obviously.

Rents in the US leveled off in September for the first time in a while, but as my auto mechanic used to say every time I drove one of my jalopies over to him, “don’t bring twenty, bring plenty.”  Rents are just too high!  The popular chant by ACORN affiliate Living Rent in Scotland as we marched in Glasgow last year was right, when they sang, “The rent is bananas – B-A-N-A-N-A-S!”  Yes, indeed!