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The rental market is softening so fast in some pockets of the country that landlords have no choice but to offer concessions

https://fortune.com/2023/09/18/rental-market-softening-lardlords-offering-deals-says-redfin/

"With vacancies on the rise, some landlords are doling out one-time discounts to attract renters while maintaining high asking rents on paper"

The rental market is softening so fast in some pockets of the country that landlords have no choice but to offer concessions

54 comments

withabeard

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What the fuck is it called a concession... rather than "fair market price"?

anon_8675309

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Fair market price is when they can gouge you. Concessions is when they actually have to compete.

magnetosphere

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It’s Fortune magazine, that’s why.

ZephyrXero

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Because they're not giving fair market prices, once you get into the meat of the article

withabeard

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"what someone is willing to pay"

Sounds pretty fair market price to me.

grilledcheesecowboy

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That's really only true if the good that's being purchased is necessary to live.

Zeppo

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I think it’s somewhat the opposite. Being forced to pay an extortionate price because otherwise you will be homeless, lose your possession, live on the street, beg friends or family for help, or live in a homeless shelter, isn’t a free market.

msage

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Oh it's a free market alright.

It's not fair, but it is free.

FaeDrifter

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You could use that reasoning to justify that anything is a free market. The government is free to pass laws, the people are free to overthrow it.

Zeppo

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Kind of. It's artificially inflated by private parties lobbying and achieving regulatory capture to manipulate the market by constricting supply.

CaptainAniki

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Freedom to be assfucked. isn't freedom. Freedom would be choice, that way I can pick whatever tier I feel like spending on. We don't have that.

solstice

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Yeah aka market correction to reach equilibrium. Nothing to see here, move along, move along.

SoleInvictus

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My eye twitches a little every time a realtor calls depreciating house prices a "market correction". Bitch please, an actual correction would be a 50% reduction in value.

solstice

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Well the market disagrees with you. And as long as people are forking over $1 million for a starter home and all other equities and commodities are at all time highs, prices won't budge.

ZephyrXero

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At first I read this headline as a good thing, but after reading the article it's bullshit. They're just giving temporary discounts to new tenants while still gouging the existing ones. And it's all in an effort to maintain their ridiculous prices 🙄

instamat

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Exactly. Nothing long term or valuable is happening.

agitatedpotato

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Yeah in the start they literally say median rent is 2 dollars lower than the record high which was set last year so with a paywall in front of it its basically misinformation by insuring most people only see the headline.

Krauerking

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Also they are doing it to keep their assets looking good on paper cause what you charge in rent values the asset which is dumb as fuck.

If it's a temporary discount it still reads on paper as if the rent hasn't decreased but if it does go down and suddenly people who have you loans based on that passive income and asset wealth catch on they will realize their loans are fucked.

We are on such a dangerous precipice because everyone has to pretend that this is totally sustainable or else we absolutely have a market crash a lot like 2008 and wow who would have seen that coming right?

dhork

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Why can't they just offer the concession of lowering their rent in the first place, instead of relying on gimmicks like a first-year discount?

themeatbridge

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Because downward trends in rent affect real estate futures, which affects lending rates, which could cause the artificially inflated property values to collapse.

instamat

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Not the artificially inflated property values!

edgemaster72

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Won't somebody please think of the artificially inflated property values!

bstix

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Many people do think about the inflated property values. Namely the landlord, the landlord's accountant, the bank and the tax office.

So, for every single property there are at least 4 people thinking about the property value, because that's where their money comes from.

gsb

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A lot of apartments in my area do first year discounts. The reason for that is a lot of cities have rules about how much you can raise rent in a year. Discounts are a loophole since they can raise it based off the non-discounted value. Also moving sucks and a new place has a chance of being terrible (and you're stuck for a year). So people are more willing to pay an increase once they're already in an apartment they tolerate.

Zeppo

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What I find interesting is when landlords talk to each other, it’s “passive income!” but when they talk to the public, it’s so much work, and they’re providing housing to people out of altruism.

neptune

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It's a bubble. If they don't up real estate investing then the market goes down and they stop making money. But yes, the hypocrisy.

Zeppo

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Yeah, when prices rise precipitously for no real reason, people always say "it's permanent!", and it never is. Steady increases over time, sure. But there was no reason for say, houses near me to go from 250k to 425k in 3 years all of a sudden.

iHUNTcriminals

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I can't remember the last time I read an article about the economy that wasn't solely for the upper middle class. ...whatever that is now.

Never settle till a one bedroom is 500-700$ usd.

13esq

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In Scotland, I rented a one bed detached house with a big garden and a sea view for £300pcm haha.

Oh aye, everything is better in Scotland!

solstice

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That's what I was paying in a small college town about twenty years ago. I doubt if we'll ever see that again. I just checked and that building isn't even there anymore. Looks like they tore it down and put in some luxury student housing (!) for around $1600/month. Wtf.

Kalkaline

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When the pandemic hit, the sheer panic of the wealthy people in my neighborhood who had multiple rental properties was super satisfying. Even more satisfying than seeing their panic was seeing their reactions to being asked why they don't just sell their properties.

Lettuceeatlettuce

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S_204

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Keep churning people. It's annoying and difficult but everytime we move apartments, it's time and money the LL needs to invest. The frothier the market, the more it favors renters.

That's how concessions become the new price. Don't make it easy on them.

Destraight

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What a terrible news article. I can't even read the whole thing without getting paywaled

Nails

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https://archive.md/2023.09.19-112842/https://fortune.com/2023/09/18/rental-market-softening-lardlords-offering-deals-says-redfin/

FlyingSquid

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There's a town near us, we're waiting for the housing bubble to collapse so we can move there, in the past 10 years, they've built luxury apartment building after luxury apartment building, hoping that the university students in the town will rent them. They're about to get a harsh awakening.

GiddyGap

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we're waiting for the housing bubble to collapse so we can move there

You may be waiting a very long time. People aren't selling their homes with mortgages at 2-3 percent from 2020-21. Golden handcuffs until rates come down at some point.

negativeyoda

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That's where I am. We bought our place in 2016. Since then i became a parent and my house is no longer ideal, but I have a 2.7% rate when we refinanced during covid.

Zillow says our place is supposedly worth 70% more, but houses are still selling for double.

I can't move. It's also fucked up that I'm incredibly fucking fortunate to even have a place. If we hadn't bought when we did we'd be fucked

mesamunefire

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Unless they go bankrupt, yeah they are sitting on that as long as possible.

SoleInvictus

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That's us. We bought our house at the height of the COVID freak out, when APRs were low but few people were buying because no one knew what was going to happen. Our house then appreciated by 35% over the course of a few months and has remained high; we couldn't afford our place anymore at current rates and prices, much less anything else.

mesamunefire

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Same. Fortunately we love our house so that's good. It's going to be our home for at least a decade (probably our forever home).

GiddyGap

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Sure, but if you can't afford it anymore or you have to move for some reason (e.g. job loss or job move), you can probably rent it out for quite a bit more than your mortgage is and keep building equity. Rents are also sky high in most metros.

Skyrmir

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They can sit there all they want, builders are more than happy to supply the market without competition from existing homes. Of course at some point rates will go down, and flood the market with existing homes, hopefully while the builders keep over producing for a while.

GiddyGap

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Builders still need to sell with high interest rates so they are also holding back.

Skyrmir

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Housing units under construction has been at a 50 year high for a year and a half, with no sign of a slow down, just a shift from single to multi family units.

GiddyGap

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Not true:

https://finance.yahoo.com/news/homebuilders-face-a-tough-balancing-act-on-new-construction-amid-high-mortgage-rates-130744368.html

Skyrmir

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Like I said, single family construction has slowed, while multi-family construction has more than picked up the slack. We're still at 50 year highs with no significant down turn. Try looking at actual data rather than propaganda pieces in the media.

https://fred.stlouisfed.org/graph/fredgraph.png?g=19jjo