Monday, June 8, 2009

Craigslist Unglues Apartment Rents

After reading John Reeder’s post over on Real Property Alpha about fundamental changes in the CRE market, I started listing some of the changes I’ve been seeing. The first on my list is the effect better information is having on the stickiness of rents.

In the good old days when the market softened you might need to drop your rents and/or offer concessions to rent a vacant unit, but you could rely on maintaining rent levels for existing tenants. Rents were “sticky”; once you got a tenant into a unit the rent level stuck. However, those days seem to be gone, and I think we have the internet in general and Craiglist in particular to thank.

It is now incredibly easy to obtain rental rate information in minutes at no cost. For example, here’s a partial screenshot of the 102 new listings in Seattle posted on Craiglist yesterday renting for between $1,500 -$1,200:


This is obviously a great tool for potential tenants. However, it’s not so great for the owner of the house I rent for me to know there are three comparables houses within a mile renting for $500 to $700 less than I’m paying.

Lack of information used to be a market stabilizer. Now, in 15 minutes anyone can get a handle on a submarket. Renegotiating a lease rate has never been easier.