The housing market in Houston is seeing a peculiar trend becoming more popular with Houston-area landlords. An increasing number of Houston landlords are using price optimization systems, which can change the price of an apartment on a daily basis based on supply, demand and historical data. It works similar to that of future markets. Here is an example: A quote of $750 on a Monday could go up on Tuesday if any leases on that particular floor plan were signed within that 24-hour period. Similarly, the price could go down if any renters submit move-out notices. The concept is to take a much closer look at a property’s availability, traffic, occupancy and what’s going on in the marketplace as far as trends or new development,” said Stacy Hunt, executive director of management for multifamily real estate firm, Greystar. “It’s sort of like buying an airline ticket, but the big difference is that transaction velocity in the airline industry happens much faster than that of apartments,” said Bruce McClenny, president of Houston-based Apartment Data Service. Apartments are more of a stabilized product. The system is also referred to as revenue management.
This growing trend reports bringing greater efficiency to apartment unit pricing, however, I believe it is a new way for Houston-area landlords to continue to raise rental rates across the metro. The increases seen in market rents have been extremely aggressive. Rental price increases across the metro have pushed to nearly 13% for 2008. The majority of the rental increases have been pushed by a large number of previous home owners being pushed out of their homes by foreclosure. This trend has increased the pool of renters driving up rental prices. Rents in the greater Houston area have now become so high that an individual with good credit can purchase a home with only 3% down and actually have a lower monthly living expense.
More recently, the impact of Ike has reduced the number of available housing units for rent. A large number of out of state contractors and the fiery of Ike leaving 50,000 housing units across the metro uninhabitable leaves us with the expectation that rental rates will continue to rise. These trends leave good reason for renters to stay put or look into purchasing a home. If you choose to leave your current residence at this time, you will most likely end up paying a higher rental price for a similar unit.
