The Charlotte Observer offers up a fascinating look into how apartment rents are increasing set much like the airlines price set airfares. Some highlights:
A decade ago, apartment complexes would generally set a price for each type of unit – say a two-bedroom, two-bath floor plan – and that would be that. Possibly, a unit on the top floor could be $10 more.
“Now, with these pricing models, every single unit could have a different price,” said Charles Dalton of RealData, which tracks apartment rates.
The software systems factor in variables such as whether the apartment operator is looking to quickly lease units or keep rents high, said Keith Dunkin, senior vice president for YieldStar, one of the nation’s largest yield management companies. The algorithms also look at how quickly units are being leased and how competitors are pricing their apartments.
At that point, differences between units within an apartment complex can drive prices even farther apart.
But Dunkin, of YieldStar, said that few renters are interested in the nitty-gritty details of how their rents are calculated. He said the systems are actually helpful for consumers because they allow flexibility for residents.
Before these systems, apartment managers might not agree to hold a unit for three weeks before move-in, or offer a five-month lease. Now, the software lets managers set a price for that type of request.
“Most people are just grateful to have the flexibility,” Dunkin said. “Because they have that flexibility in other parts of their lives.”