A recent article proclaimed that Texas-based RealPage’s YieldStar software helps landlords set prices for apartments across the U.S. and may be contributing to soaring rental property prices. Critics are concerned that the company’s proprietary algorithm is hurting renters, by enabling competitors to raise their rents.
Algorithms and Corporate Greed Drive Housing Prices
According to ProPublic, the nation’s largest property management firm Greystar found their buildings that used YieldStar software “outperformed their markets by 4.8%.” RealPage, owner of Greystar, stated YieldStar software is used to price tens of thousands of apartments around the country.
RealPage executive Andrew Bowen recently stated, “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.” In other words, with the recent increase of apartment rents climbing by as much as 14.5%, RealPage believes with confidence their software is driving the market.
Tragically, property managers across the United States have gushed about how RealPage’s algorithm boosts profits by use of data analytics to suggest daily prices for open units. This year, corporate greed is pricing many working Americans out of their apartments.
Military Members Can’t Get Housing
Florida is among the worst for rent escalation in the country. One mechanic, working as a defense contractor in Jacksonville, recently was being forced to pay his second $300 increase in just over a year. With few apartments available, and trying to stabilize his budget, he chose to take another job in Fort Lauderdale. With no pay increase, his intent was to keep his original monthly payment the same, knowing he would have to endure a downgrade in apartment quality. According to the Palm Beach Post, Broward County has had 31.7% increase since July 2021. His apartment rent requires more than 35% of his annual income, more than most recommend.
Just prior to Hurricane Ian last month, a National Guardsman from St Petersburg, Florida signed an 18 month lease, trying to hedge against the inflation battle. He rented a two bedroom apartment in St Petersburg for $2500 per month, almost twice as much as his rent 3 years earlier. According to the Tampa Bay Times, rent increases have outstripped inflation in that region, every year since 2014. For many, pay increases have not kept up.
Kortney Balas, director of revenue management at JVM Realty provided testimonial video on RealPage’s website referring to rent increases stating, “The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it.” The website subsequently took the video down after ProPublic’s article, but the video can still be viewed on YouTube.
Inflation is a National Security Threat
Less than a month before midterm elections that will decide control of Congress, the Biden administration has stated that inflation is a national and global security threat. The National Defense Strategy outlined this past Wednesday, states that inflation is a cross-border issues that “people all over the world are struggling to cope with.”
Parts for equipment, military hardware, and technology will all cost more on the global market. These will hit the U.S. defense in the pocket book, causing more borrowing and debt. National Defense Industrial Association (NDIA) stated in August that the total loss of buying power from Fiscal Years (FY) 2021 to 2023 from unexpected inflation for the military will exceed $110 billion dollars. This loss is challenging as DoD tries to make up for lost ground from COVID-19, supply chain issues, and supporting the Ukraine effort.
Pay Increases Can’t Meet Housing Inflation
The challenges for the working Americans, soldiers, civil servants, defense contractors and the effect on families and readiness is unspoken. A proposed 8.2% increase in pay should be provided to the military and civil service, but it may fall short of the actual inflation rate for rent over the last 12 months, certainly the 30% rent increase in Florida. Further, the cost of living increase will probably not be received by the mechanic in Ft Lauderdale and other defense contractors, as their employee pay is set by multi-year contracts.
On a more personal level, neither of the two gentlemen from Florida have wives or children. This situation is even more dire for working families. With the exorbitant rent, active duty service members, guardsmen, and defense contractors have ever present financial concerns. Financial and mental challenges associated with ongoing inflation, make defense readiness even more difficult.
Many believe rental property inflation is due to corporate greed. Financial obligations of rental property owners has not climbed as dramatically as rental prices. It appears companies like RealPage and their analytics provided by YieldStar software have only fed corporate greed and helped drive rent prices up. Are there other algorithms effecting national security? Regardless, national security may now be at the mercy of an algorithm.
