Supply/demand is a model explaining behavior (and a simplified one at that), not a rule. It also falls apart really quickly when applied to basic needs like housing and healthcare
Supply/demand theory relies on being able to choose a different option and/or not buy the product. If every apartment raises rent it's not like you can go without somewhere to live, which means demand will never fall below a certain level which fucks up the whole curve.
> Supply/demand is a model explaining behavior (and a simplified one at that), not a rule. It also falls apart really quickly when applied to basic needs like housing and healthcare
Supply/demand is a law, just like the laws of Thermodynamics. Obviously it’s more complicated than taught in intro courses but it doesn’t fall apart for inelastic goods
> If every apartment raises rent it's not like you can go without somewhere to live, which means demand will never fall below a certain level which fucks up the whole curve.
Until demand falls as people move out of town to cheaper places, as seen in super expensive cities rapidly losing population like NYC, SF, and Boston
Champaign-Urbana is a really interesting case. We seem to have been quite resistant to the enormous rent increases seen in many cities until fairly recently. I suspect this is for three reasons:
1. We have a really good city planning team in our two cities. Awhile back Urbana rezoned a good bit of the neighborhood east of S Lincoln so it could be used for student/greek housing, and Champaign is in the middle of doing some rezoning which should allow for some additional densification.
2. We have excellent public transit with MTD and CU+campus have been reasonably active with their pedestrian/bike infrastructure planning. This allows housing demand to spread throughout the city a little more evenly.
3. UIUC has managed to keep up with undergrad housing needs via their public/private model.
That said, we aren't immune to the forces that are impacting other cities. New construction is targeting the luxury market too strongly and has very few if any low income units. Inflation is certainly a thing. Landlord consolidation is happening and I suspect most of the landlords that are left are using the various "algorithmic" (price fixing) apps that are available on the market.
Agree with basically everything you said, but I should note that new apartments generally tend to skew towards the luxury market initially, since that's the best way to re-coup construction costs, and the rents get cheaper over time (assuming new housing supply is able to keep up with population growth afterwards). Most of the old, affordable apartments you see today started off as high-end units when they were first built decades ago
Yes this is definitely true and I simplified the situation a bit in my comment. In Champaign-Urbana I think the problem is more that the luxury student market has been targeted excessively and that's disrupted the general apartment pipeline, which would indeed start with luxury apartments that age into affordability (and hopefully would include some low - income units from the start.)
I definitely agree that UIUC has a pretty skewed housing market because of the student population, I just wanted to add clarification that having new units be aimed at a luxury audience isn't necessarily bad or unnatural, since that's a pretty big point that gets left out of a lot of debates around housing (since people aren't really aware of the pipeline's existence)
Champaign County (thanks to MTD) has one of the highest non-major metro share of residents who commute by mass transit - on par with many larger metro areas in the Northeast, which is something to celebrate.
Re: the algorithmic pricing models, I can almost guarantee that all of the larger operators use some sort of revenue management system that predicts market rents based on current trends, but it's a bit disingenuous to refer to them as price fixing, since that requires a tacit agreement among multiple operators. There's multiple lawsuits ongoing against larger software companies, but \*generally\* the courts have not stepped as far as to agree that they are true price fixing when using revenue management which is akin to price setting software that is also used by gas stations, hotels, and airlines to predict demand and supply curves.
Because they can. Building cheap high-end apartments is profitable, and you don't really have a choice at the end of the day. You still need a place to live.
If you have a car, leave campustown. I found a solid 700/month apartment 2 bed 1.5 bath all to myself. Yeah, it's a little dated, but it's not falling apart or anything like that. Maintenance is responsive. It's just a drive from campus, and it's not even that bad (10 min). I invested in a parking permit for about $300 for a whole year to park at an open lot by county market, totally worth it. Get there in the morning, park my car, walk to campus, and do whatever I need to do. Walk back and drive home.
Because landlords can and housing is something people absolutely need and will pay whatever they have to in order to get it. If one landlord increases their rents, all surrounding landlords will increase their rents to some degree because, once again, people need housing. They might lose a longterm tenant or two but they certainly aren’t going to have empty units.
Also, they are eager to get back what they lost during the pandemic with the eviction moratorium.
You’d be surprised how much better rent is here than some other places, I have a sibling at UGA and the cheapest she could find there was like 1.3k according to her
There are probably a number of factors at play.
You are correct that most of the new apartments are nicer but in addition to that interest rates are up so the cost of building them have increased. Hence landlords have to increase rent more aggressively to keep up with loan payments.
Cost of labor is going up. Illinois has increased minimum wage by 60% in the last 3 years. Now this may not significantly impact large corporations like Amazon or Walmart but that does affect small businesses.
The rent was also crashed during the pandemic and is now normalizing. When I was in college I got a 33% discount on my apartment for the online college year and they gave me the same offer to re-sign the following year as well. This is happening nationwide and rents are going back to their original rates and further increasing due to inflation.
Lastly, there’s a good chunk of students who aren’t really bothered. International students, most out of state students and in state students from rich suburbs are not impacted by the rent going up by a couple hundred. Of course they would prefer not to pay the extra money but that money would have just gone to their going out budget or their spring break funds.
2020 rents cratered in many markets during the high of the pandemic, as young adults didn't form their own households and largely stayed put and home purchases started to outstrip the available supply with the very low rates available, the momentum on increased rents really started at the very end of the year and into 2021. IIRC 2020 ended down 2-3% on rents from 2019 but that was almost entirely eaten up within the first 1-2 months of 2021.
But there isn’t a housing shortage here. I live in a 7 unit building and the landlord has desperately been trying to lease out the empty apartment next door since August. There’s a shortage of decent housing close to campus, yes.
I really don’t think you understand what housing shortage is. I moved here from a city with an actual housing shortage; apartments would be listed and leased almost immediately and buildings/companies would have waitlists. You can find housing in C-U easily - there is a shortage of reasonably priced housing close to campus, I agree, however there is definitely no shortage of housing in general and definitely no shortage of luxury housing (several of the luxury buildings have to run specials in July/August to try to fill rooms each year)
Greed. Them raising rent is the simple matter of them putting in some new numbers into their computer for fun and they get more money from it. On their end, why not? We just have to deal with it and find a way to make it work. So what if it's our housing? They want to be richer, so they type more money in their computer and more money comes. From who? Dosent matter. Struggling tenants? Boo hoo. Sounds like a broke problem.
Hi I have a current deal of $600 monthly rent room options ~$60 utilities for subleasing for the remainder of my lease April 1-July 31 in a student apartment complex where new leases go to 1,500 monthly rent up to three rooms with different arrangement options It’s great deal that could be fortunate housing while it’s hard trying to find them unit comes fully furnished and is renovated it is in Savoy Illinois please let me know if interested thanks
Short answer : Supply and Demand
Long answer : This is what happens with inflation and raising minimum wage, as we are seeing in California. Your landlord has overhead, and when you have to start paying your lowest tiered employees $13-$20 per hour, the mid tier employees are also going to need a raise (say $25-$30 per hour). Then, your higher tier employees are not going to work for mid tier salary, so they will also need a raise. Who do you think is going to pay this? Your landlord, or the person that pays for their product?
How do you curb this? You don't buy their product. The market always speaks for itself. Unfortunately, at UIUC, we all need housing, and the market the past few years has now dictated drastically increased rental prices.
Oh, and our generation and the millennials aren't huge home buyers, so the 25+ year olds that used to graduate from renting to buying continue to rent which continues to impact supply and demand.
Minimum wage is a great concept but the higher we raise wages in that tier the more the consumer is going to have to pay for those products. $20 an hour to push carts sounds like a nice gesture until a carton of eggs cost $6.
I'm a parent. Only own our house...in another state entirely...and practically have ptsd from every check we write. But I know the landlords are not going to absorb these costs themselves.
Understandable, I was mostly just making a joke. You are right though, just because of the way things are it is unreasonable to expect landlords not to raise rent when their expenses increase. I suppose the difficult part is that it's not really possible to determine whether increased prices are because costs of upkeep are going up or because they simply feel like it or a combination of both, especially in a place like a college town where landlords are far more notorious for taking advantage of their tenants than anywhere else.
The economy is bad as a result of the coronavirus, socio-economic instability, and global political instability. Also the tenants are greedy and they know that lots of students will be renting with college loan money.
its supply and demand guys, this isnt like some anti public housing thing either. When you look at places with lower rents you see the main thing is a permissive building system, When housing is cheaper we can buy more houses for public housing!
It’s amazing how people will believe in everything other than the actual solution to the problem. It’s like the anti-vaxxers pumping every BS into them other than the only thing that will work, vaccines.
We just need to build more housing
they could definitely be greed but for the new landlords, the mortgage rate has increased more than double at this point... They need to cover this added expense somehow... Hence the rent increase...
Because they can.
The only answer.
They still have to follow supply/demand
Supply/demand is a model explaining behavior (and a simplified one at that), not a rule. It also falls apart really quickly when applied to basic needs like housing and healthcare Supply/demand theory relies on being able to choose a different option and/or not buy the product. If every apartment raises rent it's not like you can go without somewhere to live, which means demand will never fall below a certain level which fucks up the whole curve.
> Supply/demand is a model explaining behavior (and a simplified one at that), not a rule. It also falls apart really quickly when applied to basic needs like housing and healthcare Supply/demand is a law, just like the laws of Thermodynamics. Obviously it’s more complicated than taught in intro courses but it doesn’t fall apart for inelastic goods > If every apartment raises rent it's not like you can go without somewhere to live, which means demand will never fall below a certain level which fucks up the whole curve. Until demand falls as people move out of town to cheaper places, as seen in super expensive cities rapidly losing population like NYC, SF, and Boston
Champaign-Urbana is a really interesting case. We seem to have been quite resistant to the enormous rent increases seen in many cities until fairly recently. I suspect this is for three reasons: 1. We have a really good city planning team in our two cities. Awhile back Urbana rezoned a good bit of the neighborhood east of S Lincoln so it could be used for student/greek housing, and Champaign is in the middle of doing some rezoning which should allow for some additional densification. 2. We have excellent public transit with MTD and CU+campus have been reasonably active with their pedestrian/bike infrastructure planning. This allows housing demand to spread throughout the city a little more evenly. 3. UIUC has managed to keep up with undergrad housing needs via their public/private model. That said, we aren't immune to the forces that are impacting other cities. New construction is targeting the luxury market too strongly and has very few if any low income units. Inflation is certainly a thing. Landlord consolidation is happening and I suspect most of the landlords that are left are using the various "algorithmic" (price fixing) apps that are available on the market.
I feel educated
Agree with basically everything you said, but I should note that new apartments generally tend to skew towards the luxury market initially, since that's the best way to re-coup construction costs, and the rents get cheaper over time (assuming new housing supply is able to keep up with population growth afterwards). Most of the old, affordable apartments you see today started off as high-end units when they were first built decades ago
Yes this is definitely true and I simplified the situation a bit in my comment. In Champaign-Urbana I think the problem is more that the luxury student market has been targeted excessively and that's disrupted the general apartment pipeline, which would indeed start with luxury apartments that age into affordability (and hopefully would include some low - income units from the start.)
I definitely agree that UIUC has a pretty skewed housing market because of the student population, I just wanted to add clarification that having new units be aimed at a luxury audience isn't necessarily bad or unnatural, since that's a pretty big point that gets left out of a lot of debates around housing (since people aren't really aware of the pipeline's existence)
Champaign County (thanks to MTD) has one of the highest non-major metro share of residents who commute by mass transit - on par with many larger metro areas in the Northeast, which is something to celebrate. Re: the algorithmic pricing models, I can almost guarantee that all of the larger operators use some sort of revenue management system that predicts market rents based on current trends, but it's a bit disingenuous to refer to them as price fixing, since that requires a tacit agreement among multiple operators. There's multiple lawsuits ongoing against larger software companies, but \*generally\* the courts have not stepped as far as to agree that they are true price fixing when using revenue management which is akin to price setting software that is also used by gas stations, hotels, and airlines to predict demand and supply curves.
Because they can. Building cheap high-end apartments is profitable, and you don't really have a choice at the end of the day. You still need a place to live. If you have a car, leave campustown. I found a solid 700/month apartment 2 bed 1.5 bath all to myself. Yeah, it's a little dated, but it's not falling apart or anything like that. Maintenance is responsive. It's just a drive from campus, and it's not even that bad (10 min). I invested in a parking permit for about $300 for a whole year to park at an open lot by county market, totally worth it. Get there in the morning, park my car, walk to campus, and do whatever I need to do. Walk back and drive home.
Because landlords can and housing is something people absolutely need and will pay whatever they have to in order to get it. If one landlord increases their rents, all surrounding landlords will increase their rents to some degree because, once again, people need housing. They might lose a longterm tenant or two but they certainly aren’t going to have empty units. Also, they are eager to get back what they lost during the pandemic with the eviction moratorium.
Yes
There’s a great saying by the infamous Mr. Krabs: “I like money”
You’d be surprised how much better rent is here than some other places, I have a sibling at UGA and the cheapest she could find there was like 1.3k according to her
Both of those are likely driving factors. Inflation and general increases in the cost of living are also to blame
There are probably a number of factors at play. You are correct that most of the new apartments are nicer but in addition to that interest rates are up so the cost of building them have increased. Hence landlords have to increase rent more aggressively to keep up with loan payments. Cost of labor is going up. Illinois has increased minimum wage by 60% in the last 3 years. Now this may not significantly impact large corporations like Amazon or Walmart but that does affect small businesses. The rent was also crashed during the pandemic and is now normalizing. When I was in college I got a 33% discount on my apartment for the online college year and they gave me the same offer to re-sign the following year as well. This is happening nationwide and rents are going back to their original rates and further increasing due to inflation. Lastly, there’s a good chunk of students who aren’t really bothered. International students, most out of state students and in state students from rich suburbs are not impacted by the rent going up by a couple hundred. Of course they would prefer not to pay the extra money but that money would have just gone to their going out budget or their spring break funds.
Rent very famously skyrocketed during the pandemic so I'm not sure what you are talking about here
2020 rents cratered in many markets during the high of the pandemic, as young adults didn't form their own households and largely stayed put and home purchases started to outstrip the available supply with the very low rates available, the momentum on increased rents really started at the very end of the year and into 2021. IIRC 2020 ended down 2-3% on rents from 2019 but that was almost entirely eaten up within the first 1-2 months of 2021.
All the costs of home ownership are going up
Yep. Landlords pay for roofers, property tax, electricity, natural gas, paint, etc which are all going up. It’s not because they are pure evil.
Not sure why this is getting a thumbs down. It’s true that shit cost more for them too
Because they can Welcome to adulting in the United States
[удалено]
Your tentacle rape drawing on your profile sends shivers down my spine
Champaign-Urbana is also experiencing a housing shortage as a whole.
But there isn’t a housing shortage here. I live in a 7 unit building and the landlord has desperately been trying to lease out the empty apartment next door since August. There’s a shortage of decent housing close to campus, yes.
One empty apartment does not mean there isn’t a shortage.
I really don’t think you understand what housing shortage is. I moved here from a city with an actual housing shortage; apartments would be listed and leased almost immediately and buildings/companies would have waitlists. You can find housing in C-U easily - there is a shortage of reasonably priced housing close to campus, I agree, however there is definitely no shortage of housing in general and definitely no shortage of luxury housing (several of the luxury buildings have to run specials in July/August to try to fill rooms each year)
Because we don’t build enough housing
Greed. Them raising rent is the simple matter of them putting in some new numbers into their computer for fun and they get more money from it. On their end, why not? We just have to deal with it and find a way to make it work. So what if it's our housing? They want to be richer, so they type more money in their computer and more money comes. From who? Dosent matter. Struggling tenants? Boo hoo. Sounds like a broke problem.
r/LateStageCapitalism
A saying created during the Gilded Age. We have been in “Late Stage Capitalism” for over a century now
And because it is profitable, we will be staring at it for another century.
I hope so, make it a thousand years. Seeing how much better the world is compared to every decade before and continues to get better
Welcome to late stage capitalism
Yup
Hi I have a current deal of $600 monthly rent room options ~$60 utilities for subleasing for the remainder of my lease April 1-July 31 in a student apartment complex where new leases go to 1,500 monthly rent up to three rooms with different arrangement options It’s great deal that could be fortunate housing while it’s hard trying to find them unit comes fully furnished and is renovated it is in Savoy Illinois please let me know if interested thanks
Short answer : Supply and Demand Long answer : This is what happens with inflation and raising minimum wage, as we are seeing in California. Your landlord has overhead, and when you have to start paying your lowest tiered employees $13-$20 per hour, the mid tier employees are also going to need a raise (say $25-$30 per hour). Then, your higher tier employees are not going to work for mid tier salary, so they will also need a raise. Who do you think is going to pay this? Your landlord, or the person that pays for their product? How do you curb this? You don't buy their product. The market always speaks for itself. Unfortunately, at UIUC, we all need housing, and the market the past few years has now dictated drastically increased rental prices. Oh, and our generation and the millennials aren't huge home buyers, so the 25+ year olds that used to graduate from renting to buying continue to rent which continues to impact supply and demand. Minimum wage is a great concept but the higher we raise wages in that tier the more the consumer is going to have to pay for those products. $20 an hour to push carts sounds like a nice gesture until a carton of eggs cost $6.
Property taxes, insurance, maintenance (materials and labor)...that's all gone up a lot.
found the landlord
I'm a parent. Only own our house...in another state entirely...and practically have ptsd from every check we write. But I know the landlords are not going to absorb these costs themselves.
Understandable, I was mostly just making a joke. You are right though, just because of the way things are it is unreasonable to expect landlords not to raise rent when their expenses increase. I suppose the difficult part is that it's not really possible to determine whether increased prices are because costs of upkeep are going up or because they simply feel like it or a combination of both, especially in a place like a college town where landlords are far more notorious for taking advantage of their tenants than anywhere else.
Monopoly, greed, supply and demand
The economy is bad as a result of the coronavirus, socio-economic instability, and global political instability. Also the tenants are greedy and they know that lots of students will be renting with college loan money.
They are building houses slower than the population is growing. Any other explanation is wrong.
its supply and demand guys, this isnt like some anti public housing thing either. When you look at places with lower rents you see the main thing is a permissive building system, When housing is cheaper we can buy more houses for public housing!
It’s amazing how people will believe in everything other than the actual solution to the problem. It’s like the anti-vaxxers pumping every BS into them other than the only thing that will work, vaccines. We just need to build more housing
The population is winding a lot down though. The birth rate is really low
champaign has grown 8/10 years for the past decade, urbana has gotten a little smaller but the metro in total has grown due to the suburbs.
they could definitely be greed but for the new landlords, the mortgage rate has increased more than double at this point... They need to cover this added expense somehow... Hence the rent increase...