(October 12, 2016) – Traditional "Large Lot Zoning" is "Greener" than "Smart Growth" within Urban Growth Boundaries . . . Copyright 2009 – 2016 . . . Tom Lane . . . Photographing California, Arizona, Nevada, New Mexico, Colorado, Utah, Oregon, and Seattle, Washington.
THIS IS UNDER CONSTRUCTION
This investigation into these immoral property management companies, and their rent maximizing software programs, and their consequences on the American people, will split this post into two, if not three, posts.
Graphs and charts appear as links and have not yet been added.
“…..People who make $8 an hour, and work very hard and warehouse positions such as wallmart, NAPA Auto Parts, and O’Reilly … virtually every place that the rest of us shop … these people aren’t good enough for these smart growth property managers, who want three times the monthly rent, using rent maximizing software such as Yield Star and Rainmaker. Furthermore, when rents go up 10% to 20% every year, then folks on minimum wage are in trouble, since the minimum wage hasn’t been indexed to inflation.”
“….These landlords and their computer programs want people to make three times the monthly rent, i.e. $1000 X 3 = $3000 a month, which is not necessarily the same as three times the minimum wage of $8 an hour.”
From the rent maximizing company Rainmaker: “Rainmaker LRO is the leading multifamily lease rate optimization solution used to maximize revenue from apartment leases. The system calculates optimized pricing based on multiple factors that influence rate setting, including traffic and lease duration, move-in dates, competitive affects and other metrics. The system also produces enterprise-wide demand forecasts by measuring and analyzing historical and current market metrics and performing calculations necessary for occupancy predictions that are dynamically updated as market conditions change.” – Rainmaker University
From the rent maximizing company Yieldstar (Real Page): “[R]evenue management is the application of disciplined analytics that predict consumer behavior at the micro-market level. This learning allows for the optimization of product availability and price to maximize revenue growth. YieldStar helps you consistently outperform your market.“
Affordable Housing – The Ethical Urban Planner’s Worst Nightmare
The biggest problem facing the urban planning profession within the context of “smart growth” and “new urbanism” is “affordable housing.” Since the housing recession ended, and smart growth towers have exploded nationwide, many property managers began using rent maximizing software to increase their profits, such as YieldStar and Rainmaker. As a result, smart growth tower rents have soared in many markets, but not all.
In addition, rents of old, run down, two and three story traditional apartments that most of us live in, have increased dramatically due to these computer programs. Property managers of smart growth towers, also take over the older properties, and use the computer programs to raise their rents. Rents are increasing faster than home values in some market, up to 12% to 22% in some markets.
Ethical urban planners recognize that rising rents cause significant financial problems, especially for students, minorities, gays, the elderly, and individuals on fixed incomes. Unfortunately, most urban planners believe that building expensive smart growth towers is the best way to revitilize a city. However, an ethical urban planner does not approve these towers, because they know that rents will go up even on old, run down properties that lower income individuals live in, due to the computer programs. At the conclusion of these posts, I conclude that some form of rent control should be imposed due to the computer programs.
Rainmaker, YieldStar, and Yardi
The company Rainmaker provides one type of rent maximizing software, and publishes the web site http://rentjungle.com, where users can type in any city, and see how rents have increased over the last several years. Unless otherwise noted, all rents mentioned on this web page are from http://rentjungle.com. Rent jungle collects data from 80% of all rental listings nationwide. At this page, I have posted one of Rainmaker’s earliest press releases on its multi-family (apartment) computer programs, in its entirety. Note this key phrase:
“…to deliver maximum profit lift for its multi-family housing clients…”
Another producer of rent maximizing software is the multi-national property management software company Real Page, under the name of Yieldstar. Yieldstar claims to increase profits 3% to 7% over the market average.
One user of Yieldstar, is quoted on the web site stating that he likes the “results” from “outsourcing” his financial information to the company, headquarted in Carrollton, Texas:
“By outsourcing to YieldStar, we’ve got multifamily experts handling revenue management for us, who essentially act like an extension of our team.” -Stephen Adams, Managing Director, LaSalle Investment Management
Many landlords, use Yieldstar with other rent maximizing programs, most notably, Yardi:
“YieldStar is platform agnostic. More than 100 mutual customers are using YieldStar in conjunction with Yardi. As an added benefit for selected clients, Yardi has released a standard revenue management interface for YieldStar to streamline the communication of data to and from our systems. YieldStar successfully works with OneSite, MRI, and eSite property management solutions as well.”
Real Page’s One Site, the company that produces YieldStar, also provides other computer programs to manage other aspects of property management, as explained in this video:
Yardi’s RENTmaximizer, has this logo:
“Increase Occupancy and Boost Profits . . . Price your apartments to optimize occupancy and maximize profits.”
“Clients using Yardi gained on average over 6% net rental income growth while improving occupancy — and properties using RENTmaximizer consistently beat the market by at least 2%.”
Their marketing brochure is presented at this PDF. It’s interesting that their headquarters are in Santa Barbara, California, since rents in all of Santa Barbara County are among the most expensive in the west.
One user of Yardi, applauds the company:
“Our RENTmaximizer properties showed 7.37% rent growth, beating respective markets by 3.25%.” – Tim Reardon, Director of Revenue Management, Bridge Property Management, LC
Due to the computer programs, a one bedroom in San Diego rented for (only) $1000 a month in 2010, and today rents for an astonishing $1800 a month. However, the average rent in California was $747 in 2000 (reference below). I’m still looking for rents for every year from 2000 to 2010 in every California city. Today, a one bedroom in the Phoenix metro goes for $920 (nearly $1000 in Tempe), compared to $610 in 2010. Imagine if your rents were locked in at $1000 in San Diego and that you were still paying that today!
If the average rent was $747 in California in 2000, and if it was also $747 in San Diego, then rents only went up by 26% in San Diego from 2000 to 2010, versus 80% from 2010 to 2016, and this decade is not over. At the current pace with the computer programs, rents will reach about $2400 in 2010. And, there are no plans for the minimum wage to go up.
What is even more alarming for a city like San Diego, is that median incomes reached their highest point in 1999, and have been declining ever since. In 1999 when California’s median rent was a bargain, at $747, the median household income was $58,000. By 2016, median rents in coastal California are well over $1700 in nearly every market (according to rentjungle.com), yet median household incomes have declined, to $53,000. That is a decline of $5,000 or 10% over a 17 year period, and the numbers are not adjusted for inflation.
Here’s a list from rentjungle.com of rents for one bedrooms in December 2010, compared to September, 2016, along with the percentage increase in rents over this six year period. Rentjungle.com only lists the most recent six years of data. The majority of landlords in these markets use the computer programs. The figures and percentages are rounded to the nearest $10.
Seattle $920 to $2000, 110%
Portland $760 to $1520, 100%
Eugene $636 to $909 (compare to demographically similar and cheaper town Chico, CA below), 43%
San Francisco $2180 to $3380, 55%
Sacramento $670 to $1100, 64%
Ventura $1350 to $1570, with a low point of $1100 in 2011. So, $1100 up to $1570 is 43%
Los Angeles $1350 to $2300 70%
Anaheim $1300 to $1650 27%
Riverside $860 to $1110 28%
San Diego $1000 to $1800 80%
Denver $800 to $1400 75%
Boulder $780 to $1470 88%
Austin, TX $780 to $1280 61%
Dallas, TX $710 to $1080 52%
Houston, TX $740 to $1180 60%
Raleigh, NC $640 to $1080 69%
Reno, Nevada $550 to $840 53% (note below that Vegas is cheaper)
Salt Lake City, Utah $600 to $1060 77%
Phoenix, AZ $620 to $920 49%
Tempe, AZ $580 to $980 69%
Scottsdale, AZ $720 to $1200 67%
Palm Springs, California $600 to $1040 (used to be cheap, before Orange County and San Diego managers took over, and wish to exclude gays, see section on GLBT discrimination below) 73%
Landlords in the following cities do not use rent maximizing software nearly as frequently:
Medford, Oregon $590 to $704 19%
Chico, California $720 to $780 8%
Las Vegas, Nevada $600 to $780 (note, cheaper than Reno) 30%
Fresno, California $610 to $780 29%
Albuquerque, NM $620 to $720 16%
Santa Fe, NM $700 to $850 21%
Las Cruces, NM $580 to $578 – 0%
Tucson, AZ $500 to $590 18%
Many of the world’s largest property managers, such as CONAM and MG Properties, are in San Diego and Orange Counties, and control properties nationwide with the computer programs. Other companies across the nation who use rent maximization include Pinnacle, FPI, Fairfield Residential, RPM, and The Irvine Company. Yet the unsavory greed of these companies does not even consider that the minimum wage has not increased during this time, and, median incomes have gone down from 2010 to 2016, as I demonstrate below with charts and graphs. Other companies include Lee and Associates, Alliance, Greystar, Riverstone, Western National, Simpson, and Camden Property Trust.
The companies in this paragraph manage and/or own 90% of apartment units in California, within California cities over 100,000. This estimation is based on my traveling and photographing the state and talking to property managers. Most of these companies use rent maximizing programs to overcharge their tenants well above the market rent, even when it is adjusted for inflation.
I first became aware of these greedy property managers when trying to move to LA and San Diego, I inquired with many landlords, and found that the majority of property owners use rent maximizing software to raise their rents above the market rate. I also found this to be the case in Riverside County, Palm Springs, Orange County, Sacramento, the Bay Area, and Phoenix, but not Vegas, Chico, Albuquerque, and to some extent in Reno.
It was originally assumed by many of us who oppose smart growth, impact fees, and urban growth boundaries, that these three factors were responsible for the “rent bubble” since the housing recession. We incorrectly assumed that a limited supply of rental housing, from these growth restrictions, was raising the rents. However, I noted that markets such as Chico, a small college town in Northern CA with an UGB, and Las Vegas, with BLM lands acting as a virtual UGB around the entire city, have not had any appreciable rent increases on rentjungle.com since 2010. A one bedroom was $720 in 2010, and $770 in 2016. Chico landlords, are mostly mom and pops, who do not have the money to buy the computer programs, unlike property conglomerates such as “Westside Rentals” in LA. Not only that, but Chico built quite a bit of infill apartments as smart growth, yet these for some reason have not raised average rents.
In California, rents have skyrocketed due to the programs. Surprisingly, a one bedroom actually went down from $792 in 1990 to $747 in 2000. However, by 2010, early release of the computer programs caused one bedrooms to go for $1300 in LA, and $2300 just six years later in 2016.
In San Francisco, this graph from Chris McCann shows how rentals have skyrocketed after the computer programs in 2010, and the second graph shows how the annual percentage increase has increased since 2010:
As for the bay area suburbs, this graph shows the median rents, and the article states that the bay area has the highest rents and rental appreciation of any area of the country. This is surprising considering the region’s high cost of living and unfavorable climate, with heavy fog and long winters that start in October. However, strict growth controls, contributed to a housing shortage in the bay area in the 1990’s as discussed in this paper: “In Short Supply? Cycles and Trends in California Housing” by Hans P. Johnson. But for growth controls to raise rents, they apparently must be combined with the computer programs, since rents have not increased in Chico, Albuquerque, Tucson, or Vegas.
In 2014, Andrew Woo found that the national median rent is $934. As a partial result of the computer programs, rents have risen by 64% since 1960, yet median household incomes have only increased by 18%. However, median incomes fell from 2000 to 2010, due to the housing recession, while rents increased by 12%. Then, after the use of computer programs really took off in 2010, by 2014, 49% of renters spent more than one third of their income on rent; up from 24% in 1960.
Woo also found that if rents had gone up only at the rate of inflation since 1960, If rents had only risen at the rate of inflation, the average renter would be paying only $568 a month, today. Therefore, growth controls and computer programs are to blame over the long term in states such as California.
Woo made a graph of five types of cities, and demonstrated that some cities had rapidly rising incomes along with rapidly rising rents, while others did not. However, he does not include information on the use of rent maximizing software. To the left of the graph, in Phoenix, in my experience, perhaps only a third to half of property managers use the programs, and in Vegas, I learned that very few use them.
Whereas most property managers in Seattle, Boston, LA, and Austin, use the programs.
Woo’s statement about coastal cities is noteworthy – since they tend to use the computer programs, as does Texas –
“Expensive coastal cities saw significant increases in incomes, but not enough to keep pace with rising rents. Washington, DC, for example, had a 33% increase in real incomes, but rents rose by 86%. Similar results were seen in San Francisco, New York City, and Boston. Renters in Los Angeles struggled the most, as rents jumped 55%, even as incomes only increased 13%.”
Woo also points out that incomes in some cities are not increasing fast enough to keep up with rents. This includes Seattle, Portland, and Denver, which are all smart growth meccas, whose landlords use the computer programs. Denver’s rents are increasing at three times the national average due to the explosion of smart growth towers – http://www.denverpost.com/2015/02/20/metro-denver-rent-gains-racing-at-triple-u-s-average-in-january/
Woo wrote: “Other cities saw incomes increase, but not fast enough to keep up with rents. This was the biggest group, comprising a varied list of cities, from Seattle and Portland on the West Coast; to Orlando, Atlanta, and Miami on the Southeast; and Denver and Salt Lake City on the interior. In some ways, this group mirrors what has happened in the US as a whole: incomes have increased by 15-25% since 1980, but rents have grown twice as fast.”
What is the “True Market Rent” for Apartments on the California Coast?
“Mom and pop” landlords generally do not have the money to pay for these programs, which cost thousands of dollars. Therefore, they do not use them, and rent their units at the market rent. On the California coast between San Luis Obispo and San Diego, a Craigs List search reveals that the market rent from a private party, or small property management company, for a one bedroom ranges from $1000 to $1250. These “apartments,” or in some cases “casitas,” or “guest houses,” are from individual landlords and small “mom and pop” property management companies who have not purchased the expensive computer programs to raise the rents.
While I cannot endorse these companies, I did notice mom and pop property managers in Ventura County and San Diego counties, with rents from about $1000 to $1250:
Carlsbad and Oceanside – http://carlsbadproperties.com/pcategory/apartments/
But other coastal markets have been ruined by the companies who use rent maximization software. The elusive RPM (Real Property) management, recently launched a division for the cental coast, and took over the San Luis Obispo area, with very high rents, despite the fact that agriculture is the #1 industry in the area – http://www.rpmmidcoast.com/search-rentals/
On their corporate web site, they claim to have 250 offices in 46 states and that they’re the country’s largest property management company. These companies charge so much for their rentals, with the computer programs, that they can grow like a cancer and rent offices nationwide wherever they please.
“True Market Rent” Often Occurs with Sublease Posts on Craigs List
Tenants who have rented for a year or more will sometimes pay less for their lease renewals, than new tenants moving in. This renter in Calabasas, California (NW of LA), was paying $1366 whenever they started their lease. Today, the complex is asking $1819. I know this complex, it’s about 30 years old with fake stucco architecture. Anything this old in Las Vegas, where very few landlords use the computer programs, would go for $800 or less !
$1366 / 1br – Sub-leasing apartment in Calabasas “Had a family emergency and need to move ASAP but my lease isn’t up until Feburary 20, 2017. You would take over the rest of this month October pro-rated and the next 4 months until lease is up. It’s a 1 bedroom 1 bathroom apartment in Malibu Canyon Apartments with tons of great amenities and I have the best neighbors all around me. I got this price of $1,366.00 when the prices were really low. Can’t find that price anywhere around the Calabasas area. 1 bedrooms are now starting at $1819 at Malibu Canyon. Huge apartment for a 1 bedroom, very spacious and all hardwood floors!! Washer and dryer in unit. Also I pay $10 for a Parking spot right outside unit. I need someone who is responsible and will treat it like there own home!!! Serious inquiries only!!! Trying to pack all up so in the pictures it’s a little messy in them, will be cleaned spotless before you move in!”
Rainmaker and YieldStar – “The Poor” are Forced to Leave California for the Desert
When rents climb to nearly $2000 in San Diego, and in the $2000’s in LA, then it’s time to leave. Fortunately, some larger, corporate owned property management companies in cities such as Chico and Vegas still play by the rules. A Vegas property manager, with a corporate owned apartment complex, told me that he had worked for several corporate property managers in Vegas, and was not aware of any companies in Vegas who used the computer programs.
Indeed, when the majority of landlords in a city are not using the computer programs, such as Vegas, then rents are significantly less, compared to cities where they are, such as San Diego. In addition, rents have only slightly increased since the housing recession in Vegas. A one bedroom in Las Vegas according to rentjungle.com was $600 in 2010, and is $780 today. In San Diego, a one bedroom was $1000 in 2010, and $1800 today.
The Zillow Rent Index indicates slower annual rates of rent appreciation in less expensive cities that are not using the computer programs, compared to faster rates of appreciation in more expensive cities:http://www.zillow.com/research/jan-2015-market-report-8951/ Two exceptions are NYC, and Washington DC, who are appreciating slowly, despite very high rents. Is this due to rent controls?
Property Managers use the Computer Programs to Exclude
Minorities, Women, and Gays
Property managers of “Smart Growth Towers,” love to use the software to exclude “the poor, blacks, Hispanics, and gays,” and only have “rich, straight white yuppies” live in their towers. Ask any members of these groups and you’ll discover this, unless you’re in the genuine melting pot cities with low rents, such as Albuquerque, Chico, and Vegas, that don’t feature very much smart growth.
median household income for Hispanics and blacks remains much less than for whites. The computer programs, require that renters make three times the monthly rent. As I show below, incomes of less than $50,000 are not sufficient to rent apartments on the west coast.
Racism is readily apparent with the marketing of smart growth. At the smart growth development McKinley Village http://mckinleyvillage.com/ near Midtown Sacramento, the promotional video features a blonde family with kids and a white poodle.
reword, he US Census Bureau also provides a breakdown by self-identified ethnic groups as follows (as of March 2014):
|Ethnic Category||Mean Household Income|
|Hispanic or Latino||$54,644|
And, if you don’t have a college degree, your income may not be three times the monthly rent, and you’ll be unable to rent.
same graph -https://en.wikipedia.org/wiki/Household_income_in_the_United_States
John Fox and Carolee Colter, of the Seattle Displacement Coalition http://www.zipcon.net/~jvf4119/, have been fighting smart growth infill for decades. Seattle, like many cities, wants to clear out non-whites in order to decrease crime. As a result, they increase the allowed density so that smart growth tower developers can build their expensive towers. As a side note, John Fox also opposes smart growth towers since trees will be cut down – https://seattlespeaksup.wordpress.com/an-interview-with-john-v-fox-low-income-housing-advocate-and-ssu-petition-signer/
It is noteworthy that many Professors of smart growth, such as Dr. William Fulton of Rice University http://news.rice.edu/2014/08/01/nationally-recognized-urban-planner-william-fulton-named-director-of-rices-kinder-institute/, former Mayor of Ventura and former planner in San Diego, do not speak out about the high rents of their towers, and the fact that “these groups” can often times not rent them, especially if they work in the fields of Ventura County outside the urban growth boundary. Will Ventura’s new city manager Rick Cole lower the rents of smart growth towers with his ambitious smart growth plan?
:Photo – Towers in Ventura –
Las Vegas compared to Phoenix
Smart Growth is only a recent phenomena in Reno and Vegas, where one bedrooms rent for $780 and $850, respectfully. However, in Phoenix, including Tempe, Scottsdale, and Mesa, smart growth has been around for years, along with light rail, and prices are rising rapidly with the computer programs. In Arizona, cities are allowed by state law to upzone and also cancel impact fees with “Infill Incentive Districts.” As a result, Smart growth tower companies have flocked to The Grand Canyon state from Texas and elsewhere. The median rent in Phoenix in 2016 is $920, but was only $600 in 2010.
Conditions will only get worse, since voters passed a tax increase of 33 Billion dollars in 2016 (Proposition 104) to fund light rail and expensive smart growth towers. The referendum was advertised on a web site from the City of Phoenix that was funded by the McCarthy Building Company of Missourri, who builds Smart Growth Towers.
Tempe, a college town, is even more expensive than Phoenix, at $980. It was $580 during the housing recession, and rents are going up faster than in Phoenix, due to the new cityscape of Smart Growth Towers and office buildings along Tempe Town Lake. Photo –
Phoenix – Mesa – Scottsdale … The Bargain is Over
At one time, metropolitan Phoenix was a bargain for Midwest residents, and the handful of Californians who dared leave their home state (most know better, it’s “snobsdale”). However, rents have gone up so fast in metro Phoenix, with the computer programs, that I’ve met two people in recent weeks who sleep overnight in their cars. One, works for Walmart, and another, is a truck driver. That never happens in Albuquerque, where rents are 30% less, and some retail wage jobs, such as Walmart, are higher due to the state’s higher minimum wage, and the cost of living is less, in part because the gasoline is from Texas.
Overall, the Phoenix metro area is a few years behind on the urban fringe developing state trust lands of where it should be, in terms of construction of affordable housing and salary growth. Instead, growth is concentrated within “Infill Incentive Districts,” (link) where costly smart growth towers are built in downtown Phoenix, Scottsdale, Mesa, and Tempe. These districts were approved by the city councils, and allow taller buildings, narrow setbacks, and they also wave impact fees.
The city of Phoenix, voted for light rail and smart growth with Prop 104 and also is giving away 18.3 Million to build a luxury downtown Frys grocer within its smart growth district. Property taxes will be cancelled. Both Mayor Jim Lane of Scottsdale and Mayor Greg Stanton of Phoenix, say that they want to attract “millenials.” “However, rents are so high, that many millenials have to live in North Phoenix, Glendale, and Deer Valley, and drive 20 miles to the downtown areas of Scottsdale and Phoenix to socialize.
It’s a lot easier, to just live downtown within walking distance of the bars “along the Aves,” in a a small college town such as Chico, California, and pay $700 for an apartment that’s probably been managed by the same family for generations!
The smart growth tower managers also want to attract attract millennials to their towers. However, the rents are so high that they don’t mean any millennial – they only mean the highly educated trust-funders from the Midwest and Texas, who can afford 1500 a month in apartments in the Scottsdale Quarter, or infill condos along Camelback Road in Phoenix. Indeed, the most common license plate in Scottsdale outside of Arizona is Texas, as trust funders bring their oil fracking money from Texas.
Indeed, the low vacancy rates raise the rents on the computer programs to astronomical levels. Studios in the Scottsdale Quarter range up to $4000 a month, and there’s no ocean view. If you’re a trust funder with fracking money, why didn’t you go to Orange County, where you can see the ocean from Irvine or Newport Beach? The rents are the same, whether it’s Donald Bren’s Irvine towers, or, towers from Mark Taylor and IBEX in Scottsdale.
The high rents of smart growth towers in Scottsdale cause older, less expensive properties who also use the computer programs to increase. I looked at a place in South Scottsdale for $1250 a month, that must have been 40 to 60 years old. The sidewalks were cracked and would present tripping hazards at night. The asphalt parking lot had never been sealed and was full of potholes. The exterior stucco of the buildings was in bad shape. Places this expensive are often inhabited by ASU students who prefer not to live in Tempe, either along its overcrowded streets filled with homeless people, or, in its overpriced Smart Growth Towers.
These rent maximizing programs are obviously not fair to students, who are already overburdened with rising tuition. Students will be faced with annual rent increases of up to 20% in Tempe, and be forced to place rent payments and non-refundable deposits (another problem with property managers) on credit cards.
Some places, trick 18 year old freshman by offering “three months free, on a 15 month lease, with approved credit.” But what if the student has to move out early, due to finding a roomate, family problems, or a student field trip? The “Student loan bubble” will only get worse as rents increase with these computer programs. Meanwhile, students at University of New Mexico in Albuquerque do not have to deal with corporate owned and operated apartments at nearly the frequency of Tempe.
Scottsdale and Tempe used to be relatively affordable. South Scottsdale in 2012 was 600 to 700 a month. Even McCormick Ranch was 650 to 750 a month when I came through the area in 2012, but didn’t end up moving there.
Why Do Property Managers Use These Programs?
What Is Their Motivation to Ripoff Tenants?
The motivation for individuals who speculate with these programs remains unclear. Rental real estate involves making a profit from your tenants no matter where someone owns property. Obviously, San Diego and Vegas landlords are both making a profit, but San Diego rents have nearly doubled in 6 years (80%), while Vegas rents have only increased about $100 (12%) over that same time.
Furthermore, there is no economic reason why a San Diego landlord would need to nearly double rents in 6 years, in order to cover increasing fixed or variable costs. Therefore, clearly, the computer programs are a means of maximizing profits. Clearly, Vegas landlords are “playing by the rules,” in terms of ethical business practises. Vegas landlords, along with Albuquerque, Tucson, Chico (CA), and Las Cruces (NM), don’t raise their rents, and presumably, wish to allow their tenants to keep more of what they make.
And again, as for urban growth boundaries, Vegas has a “virtual urban growth boundary,” of bureau of land management lands, but this hasn’t increased rents. Chico has an UGB on the west side, and land is very expensive to develop on the east side (a virtual UGB), but rents have not increased.
The question remains – Why do some markets such as Las Vegas, Chico, and Albuquerque, not “sell out” to the corporate property managers?
Rainmaker and Donald Trump
Rainmaker is a huge company, and is also involved in maximizing revenue for the hospitality and gaming businesses. I’m sure Donald Trump has a huge account with them:
“The Rainmaker Group is the market-leading provider of automated revenue management and profit optimization software solutions for the Multifamily Housing and Gaming & Hospitality industries. Rainmaker software, coupled with professional business consulting services, enables multifamily, gaming, and hospitality operators to maximize revenue from apartment leases and helps operators of casino hotels and other hospitality enterprises secure the most valuable customers to increase their profitability.
An innovator and thought leader in the highly specialized pricing and revenue optimization field, Rainmaker leverages cutting-edge research to bring clients the most sophisticated systems and help them achieve the highest profitability from their assets. Multifamily housing clients include leaders such as AvalonBay Communities, Equity Residential, Gables Residential, Post Properties, Mid-America Apartment Communities and more. Gaming/Hospitality clients include leading casino/hotel organizations such as Atlantis The Palm Dubai, Caesars Entertainment, MGM Resorts International, Omni Hotels & Resorts, Wynn Las Vegas, and many others. Headquartered in northern Atlanta, GA, Rainmaker has consistently ranked on the Inc. 5000 list among America’s top fastest growing, privately held companies. “
Marketing of Smart Growth Towers is Deceptive
Developers of smart growth towers want to make a fortune by giving tenants the impression that they’re living in luxury. They might be using these software programs along with bright colors and billboards on the exteriors of buildings in order to make their tenants “think” that they’re living in luxury. However, in questioning a Smart Growth Tower manager in North Scottsdale, at Avion on Legacy, I discovered that the four story units were not even sound insulated, and did not even have carpets. Imagine the noise!
Furthermore, the unit smelled like incense, so it hadn’t been cleaned properly. And, they did not allow smoking of any kind, even outside, or else they fine residents. In drug-ridden Scottsdale, they’re going to make a huge profit on the fines along with rent maximization.
Furthermore, smart growth city councilors and tower managers only want rich yuppies with master’s degrees living within their towns. They don’t care about everybody else, and the auto mechanics and NAPA auto parts delivery drivers have to live in North Phoenix and Glendale, far away from the bars and beautiful women and large gay population in east Phoenix, downtown Phoenix, and Scottsdale. Indeed, the gay population is moving from Palm Springs to Phoenix, since the rents are less, and the weather is better than Albuquerque.
Whereas in Albuquerque, where there is much less smart growth and higher rates of housing affordability, you might be a wealthy physician living in a nice stucco house in near UNM, where the apartment building renting for $650 a month next door is a mix of students, blue collar workers, and Section 8 Residents. When I lived in Albuquerque near the University, I paid $600, and the next door neighbor was a very wealthy attorney. A woman from North Carolina told me that Raleigh is similar to Albuquerque. Indeed, much of the country is like this, if they’re not yet using rent maximizing software in your town. Since the median national rent varied from the 700’s to the 800’s in 2000, yet median household incomes were only a few thousand dollars less, do you remember when your neighbors were both rich and poor?
Phoenix and Scottsdale are Anti-Growth on the Urban Fringe –
Relationship to Rising Rents in the City Limits
Despite hundreds of square miles of desert north on I-17, northeast on 87, west on I-10, and southeast on I-10, Phoenix and other cities in the metropolitan area have decided to concentrate their growth within “Infill Incentive Districts,” with smart growth towers and light rail. These towers are the subject of a lot of controversy, due to their effects on traffic congestion.
Impact fees and development standards are cancelled in infill incentive districts, and developers take advantage of this with gigantic smart growth towers. However, since they use the computer programs, then rents on existing older properties also increase. As a result, the average rent in Phoenix is now $920, and is $980 in Tempe.
Is it really fair to allow property managers such as Greystar, who manages brand new, expensive smart growth towers in Tempe, who are rented from wealthy college students from back east, and also manages old, run down properties in Phoenix, to raise rents on their older properties? Or, should there be rent controls for the existing properties?
And, since these infill incentive districts in the downtowns in Tempe and the other cites raise rents for everyone else, then why not cancel the districts, and build towers s0mewhere else? How about a “Scottsdale – II” way out near Buckeye, with tall towers, a huge shopping mall, and another Airpark?
Furthermore, land is much cheaper on the urban fringe, and rents will be significantly less in Buckeye, where it might go for under $100,000 and acre, compared to downtown Scottsdale, where it could go for $1,000,000 an acre, and probably much more.
Smart Growth Fails to Develop a Sense of Community Due to the Computer Programs
If smart growth was properly designed, it would be affordable by the residents who already live in central city areas. However, rents are usually well over $1500 for a tiny studio, yet many residents have a spouse and a kid or two. Some towers offer move in incentives, such as sign a 12 month lease get 3 months free, and a young family might move in. However, when the rents increase by 22% to 40% on the renewal date due to the computer programs, they will flee to the distal suburbs.
Likewise, a student might sign that lease, thinking that they’re getting a good deal. At the end of the 15 months, they would not be expecting a double digit increase, and would be forced to move out. They might have to move to Deer Valley in North Phoenix, 30 miles northeast of ASU. What if they do not have a vehicle?
Below, this Craigs List post of a Smart Growth Tower in Mission Valley is being vacated by two folks who are moving to Carlsbad for a job transfer. It’s renting for $2700 a month, which is outrageous. They could buy a house in Temecula for that. Also, they’re fortunate to move to Carlsbad since rents are lower in the Carlsbad – Oceanside area, compared to the City of San Diego. And, there are a lot of mom and pop property owners up there, who do not use rent maximization.
Much of the Smart Growth in metropolitan San Diego is from the legacy of Dr. William Fulton, as I’ve discussed earlier.
Insert Craigs List Post
The Most Alarming Issue with Rent Maximization – Median Incomes are Stagnant – Property Management Companies Insist on Raising Rents
“…my rent goes up $100 a month every six months, but I’m still only being paid minimum wage…”
The most alarming problem with rent maximization is that while rents have increased since the computer programs in 2010, salaries are stagnant. This U.S. Census chart shows median incomes for the past several decades. Unfortunately, the release of the computer programs corresponds with the most recent recession. Salaries have not increased since 2009:
2014 report –
In addition, renters are more likely to make less money than homeowners. However, this graph shows that since 1970, the rich have got richer, while the poor have gotten poorer –
So why are landlords increasing rents at up to 20% every year in some markets? They read the same reports on income and poverty that I have quoted here, in their real estate trade publications. One would think that they would wish to be benevolent to their customers, and not overcharge their tenants. There is only one answer – they clearly do not care if their tenants have any money to put in the bank. They also do not care if they have 5 to 7 tenants in each apartment, causing excess wear and tear, and clogging the streets with parked cars. They do not care if girls have to walk a long distance to the street at 6am and risk getting raped, because all the spaces are taken, since everyone has 3 to 5 roomates in a one bedroom. Therefore, these property managers have no sense of social justice. – photo – Carlsbad – cars parked outside apartments on street –
Income Equality and Displacement of the Poor due to Smart Growth Towers
Landlords, including smart growth tower managers, require that tenants make three times the monthly rent. In other words, if the rent is $1500, landlords require that tenants make $4500 a month, or, $54,000 a year.
Cities who use rent maximizing software and/or who have a preponderance of Smart Growth housing, have swept out the poor, although in doing so, they end up with a huge homeless population on their streets. Smart growth cities have expensive downtown districts, such as downtown Scottsdale and Phoenix, and cheaper suburbs.
The Gini Coefficient is a number that falls as more people make the same amount of money, and fewer people make different amounts of money. Indeed, a lower Gini Coefficient corresponds to the amount of “exclusionary zoning” that occurs as smart growth city councilors and their developers make things too expensive for the poor.
Therefore, Seattle, has a low gini coefficient, at .445, and, Portland, at .447, as both markets have swept out the poor with their smart growth towers. Whereas Albuquerque, has a high number, at .463, due to a diversity of incomes, including “old money” that founded the town, combined with 18% of residents living under the poverty line, and a middle class that has a relatively low median income. Whereas an apartment near the University of Washington might go for $2000 a month, Craigs List in Albuquerque shows that you can rent for only $600 a month near the University of New Mexico.
Los Angeles, is at .489 since unlike Seattle and Portland, the city has not mandated smart growth. And, as with Albuquerque, there is quite a bit of “old money” along the coast and in Hollywood, along with a large poor population and struggling middle class. South Africa is 0.6, due to a huge gap between the rich and the poor, and, Sweden, is 0.25, due to socialism, equal pay, lots of social services, and higher taxes. Nationwide, the U.S. number has increased from 0.36 to 0.4 from 1990 to 2010, as the middle class shrinks. Therefore, landlords who use rent maximizing software are taking away the ability to “save for a home,” and home ownership is essential to join the middle class.
the 20 countries with the greatest income distribution equality between 2003 and 2012.
Smart Growth is Only for the Rich
Smart Growth Towers generally rent for $1500 to $2000 a month, and, smart growth landlords want occupants to make “three times the monthly rent,” since Rainmaker and Yieldstar require income requirements in their algorithms that approve or deny tenants. Co-signers must make an astonishing “five times the monthly rent.” For renters, the arbitrary figure of “three times the monthly rent” would be an annual income between $54,000 and $72,000, well over the 2014 national median household income of $53,700. So the Smart Growth folks only want “rich yuppies,” and do not want “lower” income individuals living in their towers. But if you and your significant other are making $53,700, isn’t that still a very respectable salary? And, even if you’re single, isn’t it wiser to spend that on a house?
This requirement is so ridiculous, that even if you don’t make a salary of three times the monthly rent (i.e. over $54,000), then you could rent a Marriott Hotel for $36,500 a year, at $100 a night! In fact, in my travels in California, the majority of budget motels such as Motel 6, Econo Lodge, and Days Inn, are filled with “residents” who are paying discounted weekly rates. These folks, were hired for construction and blue collar jobs in cities such as Camarillo and Thousand Oaks, but do not make three times the monthly rent, so they stay in motels. They return to their families, often in Riverside County, Santa Maria, or the Central Valley, on weekends. These hotels, are always full on weekends, but even have 90% occupancy on weeknights!
Once a developer comes into a city with a preponderance of lower income residents and starts building smart growth towers renting for $1500 tp $2000 a month, families will be forced to leave central city areas for the suburbs. Ironically, the proponents of “smart growth” also dislike “urban sprawl.” However, many occupants of downtown apartments, that will be condemned for infill towers for trust funder millenials and immigrants working in high tech, move to cheap apartments on the urban fringe. For example, if they are displaced from inexpensive, 50 year old fake stucco apartments in downtown Phoenix, Mesa, Tempe, or Scottsdale, they might move to the urban fringe in Glendale, Deer Valley, or the West Valley.
Furthermore, proponents of “Smart growth infill” also wish to cut greenhouse emissions and commute distances, including Governor Brown’s Smart Growth Climate Bill AB 32. However, developers charge so much for the towers, that folks who work in downtown Sacramento cannot afford to live downtown. They have to commute 25 miles – each way – spewing greenhouse gases – from as far away as Roseville and Folsom. In addition, the schools are so bad in “Midtown Sacramento,” that parents who cannot afford the rising rent in Roseville and Folsom, may move out 40 miles to Auburn or Cameron Park.
As Smart Growth infill has replaced low cost housing, lower income households have been forced to flee due to rising rents. This graph can be interpreted in many different ways. To some extent, it is partially accurate in demonstrating that “smart growth cities” have relatively low ratios of low income to high income residents, since huge numbers of low income households have fled. “Low income households” are defined as those where the combined incomes of all occupants equal $50,000 or less, and, “high income households” are $200,000 or more.
Indeed, note above that smart growth tower developers require that applicants make at least $54,000 a year. Are they reading these census statistics “in order to exclude non-yuppies?” Note ratios of 14.6 for Las Vegas with very little smart growth, compared to roughtly 6 in San Diego and Seattle, with smart growth everywhere.
Another indication of what types of buildings people are living in is based on the poverty rate. Cities that have converted much of their housing stock to “smart growth towers,” such as Seattle, have also lowered their poverty rates, since only “rich, high tech” types can afford the rents, working for Microsoft, Starbucks, and Amazon. While Seattle has a 11% poverty rate and hundreds of towers, Las Vegas has only a handful of relatively new towers, and fewer well paying jobs. As a result, the poverty rate is 16%.
Many College Graduates Do Not Make Three Times the Monthly Rent
Glassdoor listed the highest paying college majors, and found that only 12 out of 50 occupations made three times the monthly rent, $54,000 or more (assuming the rent is $1500 monthly). 38 occupations made starting salaries of less than $54,000, including biologists, architects, journalists, and even teachers. Only engineering, finance, computer, and biotech occupations made enough money for a smart growth tower.
Even University of California Employees Struggle with the Property Managers
70% of support staff at University of California campuses in a survey from Occidental College recently said they have trouble making ends meet. The median salary is $43,000, but KNX Newsradio 1070, stated that over $60,000 would be required in the L.A. area (October 17, 2016, KNX).
“The study, led by Peter Dreier, E.P. Clapp Distinguished Professor of Politics and chair of Occidental’s Urban & Environmental Policy Department, found that nearly half (45%) of 2,890 employees surveyed throughout the 10-campus UC system (the third-largest employer in the state) actually went hungry at times. Another 25% said they were forced to reduce the quality of what they ate. This was in spite of the fact that most of those surveyed were full-time employees with college degrees who made an average of $22 an hour.”
The study’s author, Peter Dreier, actually blamed California’s high housing costs, which are a result of the computer programs! –
“Dreier in part blamed the problem on California’s high housing costs, which eat up a significant portion of workers’ income and make it difficult for them to feed themselves and their families adequately.”
“Residential towers have begun to spring up among the Airpark’s corporate offices and shopping centers as young professionals pursue a more urban lifestyle within walking distance of their workplaces.
Crescent Communities recently opened 275 high-end apartments at Scottsdale Quarter, and another 220 luxury condos are under construction across Scottsdale Road at Optima Kierland.”
“The 91 in Riverside County ranks among the nation’s worst commutes. Stop-and-go traffic is the norm, especially during morning and late afternoon rush hours. In fact, traffic congestion on eastbound 91 between Anaheim and Corona is routinely among the worst five areas in the nation.
Good news is on the way for drivers, thanks to the 91 Project. Led by RCTC (Riverside County Transportation Commission), the project will add regular lanes, tolled express lanes, auxiliary lanes and direct express lane connectors from the northbound 15 to the westbound 91 and from the eastbound 91 to the southbound 15. Improvements to interchanges, ramps and surface streets also will be made along the 91 corridor.”
Smart Growth Developers Discriminate against Minorities and Gays
The above graph demonstrates that most minorities are making well under $54,000, the minimum required for the lowest cost smart growth towers. Unfortunately, we still have not reached a point in our society where blacks and Hispanics make as much money as whites. In addition, smart growth tower developers discriminate against gays, since they are usually in single households, sometimes well past the married age for straights. Furthermore, gays would be less likely to find a “roomate” to split costs, due to fears that a straight person won’t like them.
20.7 percent of LGBT people living alone have annual incomes below $12,000 — close to the poverty level — compared to 17 percent of non-LGBT people living alone. Single LGBT adults raising children are three times more likely to have incomes near the poverty level than single straight adults raising children. Transgender Americans are nearly four times more likely to have a household income under $10,000 per year. Twenty-four percent of lesbians and bisexual women are poor, compared with only 19% of heterosexual women.
Clearly, smart growth developers are anti-gay, and do not want the GLBT community in their towers.
Smart Growth Developers Discriminate against Women
and Contribute to High Rape Rates
Traditionally, women make less money than men. In 2014, the average salary for a women was $39,000 compared to $50,000 for a man. Graph – This graph is for all ethnicities. Above, I calculated that smart growth tower landlords require that occupants make three times the monthly rent. And, the census figures demonstrated that a “lower income household” makes $50,000 or less. Since most women are making less than $54,000, then they are unable to afford a smart growth tower. They will either have to live in bad areas and experience a higher risk of rape, or, live in cheaper apartments on the urban fringe, with very long commutes.
Furthermore, if three to five women have to share an expensive one bedroom apartment because the rents are too high, not all of them will be able to park on the property, since most buildings allow just one or two spaces per unit. Therefore they will have to park on the street, and walk to the car in the dark, and possibly get raped. Therefore, the computer programs just like the Democrats who invented them are “baby killers.” How far should I take this?
Earnings of women are less in red states, so they are even less likely to make three times the monthly rent if they live in a red state run by blue state landlords out of San Diego.
Republican Argument for Rent Controls
The Republican argument for rent controls is very well-defined. Republicans in power, who are very pro-growth and wish to recruit entrepreneurs along with new businesses, have to provide adequate housing, so that new companies come in. For example in Riverside County, the Board of Supervisors wants the county to grow, and bring warehouses, distribution centers, and corporate headquarters from Coastal California counties, such as Sketchers and the World Logistics Center. Land prices and therefore construction costs and warehouse rents, are more expensive along the coast. However, companies do not go where there is not already a large population of Millennials and gen-xers who will work for them.
Therefore when you look at the booming Riverside County suburbs of Temecula and Murrieta, where the average rents are $1400, it’s interesting to note that the differential in housing costs between the coast and Riverside County is only about 10 or 15%, Anaheim and Santa Ana are both 1600, and San Diego is 1800. Young people who currently live in apartments in LA, Orange, and San Diego counties are going to stay, since the quality of life near the ocean is higher than within the “Inland Empire” of California (Riverside and San Bernardino Counties).
Why would they moved inland to only save 10 to 15%, when there are less things to do for their demographic? Therefore, in future years, companies may, or may not, find the demographic they are looking for, as rents continue to rise in Temecula and Murrieta.
So far, offices managed by Lee and Associates in Southwest Riverside County, have a 1.12% Vacancy Rate as of mid-2016. However, construction has slowed way down. The company also manages extensive land holdings, where new companies may – or may not – come in.
MURRIETA, Calif.—July 21, 2016— The Temecula Valley office of Lee & Associates, the largest broker-owned commercial real estate firm in North America, has released its second quarter 2016 Southwest Riverside Industrial Market Report.
According to the report, which was prepared by Caroline Payan, director of marketing and research of Lee & Associates Riverside County offices, the majority of Southwest Riverside County’s industrial real estate market remains stagnant as a result of near zero vacancy, little new construction and anemic absorption. The overall industrial vacancy rate for Southwest Riverside, which is made up of the cites of Temecula, Murrieta, Hemet, San Jacinto, Romoland, Homeland, Anza, Aguanga, Wildomar, Canyon Lake, Sun City, Lake Elsinore and Menifee, stands at 1.12%.
Riverside County Senator Mark Takano (D-Riverside) has launched an investigation about the rising apartment rents in the county. If Riverside County put a cap on rents of no more than a 5% increase within the next 24 months, then would this sustain the relocation of businesses from the coast? What if this cap also included a cap on rent increases of commercial property, such as Lee and Associates, who manages the majority of vacant land in Temecula and Murrieta?
Conclusion – The Homeless are a Direct Result of Yieldstar and Rainmaker –
Their Apartments are Condemned for Infill Towers
This web page began with the fact that affordable housing the biggest problem facing urban planners. More specifically, homeless in downtown areas is the biggest problem in downtown areas, especially areas with smart growth towers. Most universities continue to turn out urban planners today that believe that building taller and more and luxurious buildings in inner cities with higher rents is the best thing to do to revitalize our cities. That’s because most professors and their graduate students are given grants from the smart growth tower companies.
Of course as stated above, the property management companies use rent maximizing software to raise the rents in downtown and suburban areas to astronomical levels. However, lower income housing not using these programs is condemned, due to policies that allow upzoning for towers. North 73rd Street, just south of the Staples and Extended Stay America in downtown Scottsdale, is a textbook example of a transformation from cheap housing to smart growth.
By lower income, I am not referring to “low income housing” taken up by “poor people.” Instead, I am referring to people who are working and paying rents near the national average of $934 a month. Once someone is displaced due to infill, they have to move to the distal suburbs. Since Hispanics, women, gays, and blacks, make less money than whites, than our cities become more white, more conservative, and more straight.
I remember as a kid visiting other churches, as part of our church group, and we went to the black Baptist Church on Capitol Hill in Seattle I wonder if the church is even in existence anymore, because the smart growth people completely took over Capitol Hill and the University District. Most African Americans had to leave these areas for South Seattle and the Green River Valley. Smart growth skeptic and Geography professor Dr. Richard Morrill found that the population of Seattle is becoming increasingly white. From his article, non-whites have moved south of Seattle to suburbs with lower numbers, which actually refer to higher diversity –
Sea Tac 0.2473
Boulevard Park 0.2595
White Center 0.2646
Federal Way 0.32422
Dr. Randall Pozdena observed the same phenomoena in Portland in an article entitled: “Smart Growth and Its Effects on Housing Markets: The New Segregation.” But Morrill and Pozdena were not the first, as it was Frank Lloyd Wright who talked about downtown areas for becoming so expensive because of landlords raising the rent as high as they could, and that was even before the age of yieldstar and Rainmaker. Wright wanted cities to spread out into the countryside with the broadacre concept, where everyone had one acre of land. He thought this was the best cure for poverty.
Smart Growth Towers One of Several Ways to Sweep the Poor Out of White Cities
It is critical to point out that demolishing affordable housing, and building expensive smart growth towers, is just one part of a larger plan of “downtown revitilization,” to clear the slums, and make downtowns only for rich white straight yuppies. Other aspects of this plan include banning certain retailers that rich people do not “need.” For example, the City of Scottsdale planning department excludes both Del Taco and Metro PCS. In addition, the City of Phoenix excludes these chains in the Deer Valley area in far north Phoenix. The rich, white suburbs of Cave Creek and Carefree also exclude these. In your town, you can probably think of various stores that are banned, especially Wallmart and Stater Brothers Grocery Store, so that the “undesirables” do not come to town. Racist whites on planning departments consider gays, blacks, and Hispanics as unwelcome, and will play games with the approval process, if Del Taco or another entity wants to come to town.
In contrast, Temecula and Murrieta in Riverside County, California, are good examples of cities that approve just about everyone and has Hispanics, blacks, gays, and whites, and a high rate of income equality. Both cities, actually have lower crime than Phoenix.
Recently I changed my phone service from Verizon to Metro PCS in Phoenix. I picked the right day for an aspiring urban planner to go in, since the first customer had an older model car. It flooded and would not start, filling the store with raw gas fumes. The second customer, was blind. Both individuals could have been on fixed incomes, and were taking advantage of the low phone rates from MetroPCS. Palm Springs, Rancho Mirage, and Palm Desert, CA also ban MetroPCS. For Palm Springs to ban it is strange, due to the large gay and Hispanic populations.
It’s worth pointing out that Scottsdale’s racism is not found in other wealthy cities. Donald Bren, who runs Irvine, California, has Walmart, Del Taco, and Metro PCS. Although, he does use rent maximizing software programs on his apartments, but for some reason, he charges well below the median in Los Angeles.
Property Managers and their Computer Programs Take Money out of the Local Economy
Large corporate property managers in California, Texas, Illinois, and elsewhere, take money out of the local economy. People have very high rents, due to the computer programs. They have less discretionary income for restaurants and retail, taking money out of the local economy. That money is going to out of state property managers, and to the shareholders of the rent maximizing software companies. The rich get richer, the poor get poorer.
Rent controls keep prices down, and properties may deteoriate. There is an alternative to rent controls that will benefit both tenants and the surrounding economy, and it is remarkably simple. Require that property managers cannot increase rents by an amount greater than the percentage annual increase in the median income in the city. And, because we will inevitably have another housing bubble, require that rents must decrease not only one median incomes ultimately decreases, but also in a way that is proportional to median housing prices crashing. If such a program is established, it could be maintained and enforced by the low income housing offices, which already exist in practically every city in the United States of America. Landlords would simply be required to turn in every year how much rent they charged times their number of units. Of course, they could use yieldstar and rainmaker and lie to city officials, so city officials could stop by as potential renters to make sure rents aren’t going up faster than median incomes.
Cities that play by the rules and do not overcharge, such as Chico, Vegas, and Albuquerque, might find it amusing that Los Angeles and San Diego landlords are so greedy that such a program has to exist in the first place to discipline property managers for unethical conduct.
Another solution would be to require a public hearing before a multi-family building is sold. The prospective buyer would need to clarify if they plan to raise the rents, and if so, by how much, and how fast. They would also need to state if they plan to demolish the building for a Smart Growth Tower.
Do Employees of Management Companies Like the Computer Programs?
Absolutely not. There are lots of internet forums, where former employees of management companies criticize their employer’s use of the computer programs. Here are a few comments from a forum:
These services are essentially computer programs that attempt to maximize profits in large residential leasing operations. They purport to take the “guesswork” out of setting rental prices and other terms of rentals. They gather and analyze rental data in a given area, apply factors such as season, time of month, and all sorts of other qualifying criteria to set rental prices, mostly for lease renewals.
My sense is that these services work for very large leasing operations who use low paid and inexperienced leasing agents. For everyone else, though, I’m not sure that these services will work very well. A computer program can’t “see” an apartment, but will nevertheless try to tell us its rental value. I think not.
Landlords Lied To All the Time
There are ways of getting around the “Three times the monthly rent” requirement. First, one may present evidence of substantial savings. Many property managers will qualify tenants who have three times the monthly rent, and then, times the duration of the lease. For example, if the rent is $1500, then $1500 X 3 = $4500 X 12 = $54,000. Therefore, one could go out and get a loan for $54,000 and show this to a landlord. Then, one can pay this $54,000 back to the bank to avoid interest charges.
Second, many companies on Craigs List advertise that they make fake pay stubs to give to landlords. Is it OK to lie to unethical people? Here’s an example:
What this all boils down to is ethics and morality. Rent maximizing programs are strictly designed to increase profits, but some landlords do not use them, since they are expensive to purchase, and they also realize how unethical it is to raise rents above the market rate. From 2010 to 2016, rents have increased by up to 80% in cities that use the computer programs. However, cities such as such as Chico, California, Las Vegas, Nevada, Albuquerque, and Tucson, have honest, fair landlords, who have not used these programs. This issue with rents, unfortunately, indicates that most landlords refuse to play by the rules. Their greed needs to be controlled.
So far, very few people have addressed the evils of speculation on tenants by way of rent maximizing software. Given the affordable housing crisis, which is actually an affordable rental housing crisis, legislation will be introduced at the local and state levels to stop property managers who use companies such as yieldstar and rainmaker. One reason that nobody addresses rent maximizing regimes, including the multi-national companies that use them, is that Smart Growth advocates are paid by the construction companies to produce their colorful web sites. It’s likely that a stipulation of these contracts is to never mention rents or rent controls on the web sites.
Similarly, Libertarian web sites that oppose smart growth do not discuss rising rents, since Conservative think tanks pay them, and once again, it’s likely that part of the contract is to never suggest a solution that is not a free market solution. Of course, capitalism and freedom of choice in housing, neighborhood preference, and transportation choice remain this web site’s main points. However, if capitalism acted alone, we would not have parks and open space, bike lanes, and nature preserves. Similarly, if speculation on tenants in large metro areas does not cease, our homeless problem will reach epidemic proportions, and millenials will will at home for progressively longer periods of their adult life. They will never truly enter the free world, which is what every parent dreams for their kids once they turn 18.
“….the median income has been declining since 1999, yet rents have __________ .”
“….states out west with smart growth don’t make a lot of money …”
“…..since 1970 the rich get richer the poor get poorer …. “
Income inequality is a big topic for public discussion in the United States. About 65 percent of U.S. Americans think that the gap between the rich and the poor has gotten larger in the past ten years.
Income distribution is also affected by region. New York was the state with the widest gap between rich and poor people in the United States with a Gini coefficient of 0.5, as of 2010.
In global comparison, the Seychelles lead the ranking of the 20 countries with the biggest inequality in income distribution in 2012. Seychelles had a score of 0.65 points, based on the Gini coefficient, while South Africa was on rank 4 with a score of 0.63. On the other hand, the Gini coefficient stood at 0.25 in Sweden, indicating that income is widely spread among the Swedish population and not concentrated on a few rich individuals or families. Sweden led the ranking of the 20 countries with the greatest income distribution equality between 2003 and 2012.
Most poor people want to get out of expensive, congested downtown areas. However, under the current paradigm of smart growth urban planners, mayors and councilors just build more smart growth towers, that will be subsidized in some way. However, the poor would prefer homes with private yards.
If they could escape, then they would. However, with urban growth boundaries and impact fees, housing in the suburbs is too expensive. As of this writing, a condo project in the very safe suburb of Deer Valley, AZ (actually part of incorporated Phoenix), exactly 20 miles north of downtown Phoenix, offers expensive condos starting at $199,000.
And, in the Estrella neighborhood of new homes in west Phoenix, 18 miles west of downtown, new three bedroom homes are starting for $180,000. Given that Hispanics and African Americans have limited family wealth compared to whites, how will they escape – as Frank Lloyd Wright stated – “The Tyrrany of the Skyscraper?” This graph demonstrates that while white households have been accumulating wealth rapidly (from 1963 to 2013), yet Hispanics and Blacks have not accumulated that much at all –
Post – map –
Affordable suburbs, would also give Hispanics and African Americans the chance to make more money working in manufacturing and office positions, within Airparks. The Cities of Temecula and Murrieta in Southwest Riverside County, California were set up so that everyone of any ethnicity would be able to rent, and put money in the bank for a house, and work in the “Murrieta Airpark” or in an office or warehousing in Temecula. Both towns are over 95% suburban in character, since downtown Old Town Temecula is limited to one street for a quarter mile, and downtown Murrieta is limited to a similar amount of space. Most people who work in Temecula and Murrieta make the same amount of money. Unlike Phoenix and Scottsdale, they are very racially integrated, and Hispanics and Blacks, have just as many chances as Whites, to acheive similar goals of employment and home ownership.
Urban Growth Boundaries, Impact Fees, and Smart Growth Do Affect the Price of a Home
Much of this blog is about home prices, and how urban growth boundaries, impact fees, CEQA, and other smart growth policies increase home prices. According to the calculations of blogger “mercyman53,” single family homes have increased by 1050% since 1970,
Here is the crux of the whole matter. A new house cost 1050% more in 2006 than in 1970. That means a new house in 2006 was 10 ½ times more expensive than one in 1970. By comparison, the median household income increased 452% between 1970 and 2006. The 600% difference between income and housing expense is why there is a crisis of monumental proportions plaguing this country.
In 1970, the ratio between income and new home cost was 33%. In other words, a new home cost about 3 times more than the median household income. By 1980, due to the horrific inflation during the 1970s, that ratio dropped to 23%. The new home was now 4 times more than the median household income. By 1990, the ratio had dropped further to 20% and was still at 20% in the year 2000. By 2006, the ratio had dropped to 15.7%. People can no longer afford new houses. The income is not rising nearly as fast as the cost.
Here comes the statistic I have been leading up to all this time. In 1957, the average price for a house in the United States was $2,330. Can you believe that! A house and a car cost roughly the same thing! I know “normal” people who pay $2,330 per month to rent an apartment. Just 50 years ago, this figure represented the average price for a house in this country.
Now consider what the average price is today (not taking into account the current depressed prices due to the sub-mortgage crises); which is $212,800. The average price of a house fifty years ago represented 50% of the annual income for the average family. The median price today is four times MORE than the average family makes in a year. This statistic explains why Americans today are saddled with a debt load that destroys marriages and causes the current unheard of foreclosure rates
In 1958 my parents purchased a modest home in a nice residential neighborhood in Wichita, Kansas. The house cost about $8,000 and their monthly mortgage payment was a little over $100 per month. Today, the average family in this country has a house payment of around $1,250 per month. All things being equal, if nothing else had changed between 1957 and today; then the amount paid each month for the house payment would not be much different than fifty years ago (the rule of things increasing tenfold), but all things are not equal.. But, if the current trends continue, no one will be able to afford the home they live in. Instead of moving up, they will be forced to move down to housing they can afford.
This blogger has also written a carefully worded essay on the history of affordability that I’ve repeated here _____, in case his web page expires.
David Stockman provides these charts of expenses in 1970, 2000, and 2014 –
Solution for the Author of these Lines
For me, the solution to rising rents and expensive housing is relatively simple – become and urban planner, and make a six figure salary so that I make “three times the monthly rent,” and pay annual rent increases of 20% a year in an exciting and diverse city such as LA. For my readers, I suggest that you lobby your city for some form of rent control, i.e. requiring that annual rent increases never go up faster than the per capita income –
Here is a job for a planning technician in Santa Clarita, CA, a suburb of LA –
|Job Title:||Planning Technician or Assistant Planner I|
|Opening Date/Time:||Tue. 10/04/16 12:00 AM Pacific Time|
|Closing Date/Time:||Tue. 10/18/16 12:00 PM Pacific Time|
|Salary:||$4,212.23 – $6,238.22 Monthly|
|Job Type:||Regular Full-time|
|Location:||City Hall, Santa Clarita, California|
|Description/Duties & Responsibilities Benefits Supplemental Questions|
|The City of Santa Clarita is hiring one position at either a Planning Technician or an Assistant Planner I level.
The Planning Technician will be responsible for assisting customers at the public counter and on the phone with planning questions; reviewing over-the-counter permits, entitlement applications, and plot plans; conducting research and planning studies; and making public presentations on a variety of planning issues.
The Assistant Planner I position will be responsible for assisting customers at the public counter; reviewing subdivisions, zoning, and development requests; performing planning studies; and presenting to the Planning Commission on a variety of planning issues.
Planning Technician Duties and Responsibilities: • Provides assistance to customers on the phone and at the public counter; responds to questions pertaining to subdivision, zoning, and development requests • Reviews over-the-counter permits, entitlement applications, and plot plans; initiates the land use entitlement process by gathering application materials and creating project files; prepares case files for distribution; prepares planning-related correspondence • Maintains planning files for the division; tracks and orders forms and supplies for the planning counter; inputs planning data into the OmniRim online database • Performs planning studies, conducts research, does site surveys, and prepares reports pertaining to the General Plan, Unified Development Code, environmental assessments, annexations, and population projections • Provides information to GIS staff for the development of graphs and maps • Attends community meetings, City Council meetings, and Planning Commission meetings, and makes presentations on a variety of planning issues
• Establishes positive working relationships with developers, community organizations, state and local agencies, City staff, and the public
Assistant Planner I Duties and Responsibilities:
• Responds to questions pertaining to subdivision, zoning, and development requests; provides assistance to customers on the phone and at the public counter; confers with developers, building designers, contractors, architects, and the general public on planning-related matters
• Interprets planning policies, laws, and ordinances; reviews planning proposals; establishes conditions for project approval to ensure compliance with these policies, laws, and ordinances
• Issues home occupancy permits, conditional and minor use permits, oak tree permits, and other over-the-counter permits
• Performs planning studies, conducts research and analysis, and writes technical planning reports pertaining to the General Plan, Unified Development Code, environmental assessments, annexations, and population projections
• Prepares planning documents including staff reports, resolutions, and environmental review documents
• Conducts site surveys and formulates site design alternatives within the regulations of the Unified Development Code
• Attends community meetings, City Council meetings, and Planning Commission meetings, and makes presentations on a variety of planning issues
• Establishes positive working relationships with representatives from developers, community organizations, state and local agencies, City staff, and the public Education and Experience:
• Bachelor’s degree in Urban Planning, Urban Studies, Geography, or a related field
• Experience providing customer service in person and on the phone is desired, preferably within a municipal planning environment
• Any combination of education and experience that has provided the knowledge, skills, and abilities necessary will be considered
• Possession of a valid Class C California driver’s license
Assistant Planner I
• A Bachelor’s degree in Urban Planning, Public Administration, or a related field
• One year of professional planning experience in public or private sector is desired, preferably in a planning organization
• Any combination of education and experience that has provided the knowledge, skills, and abilities necessary will be considered
• Possession of a valid Class C California driver’s license
Knowledge and Abilities:
• Knowledge of land use, planning, and zoning policies and processes and the ability to use this knowledge to explain regulations and policies to customers and review and evaluate development plans
• Familiarity with the subdivision map act and the California Environmental Quality Act
• Strong organizational skills and the ability to effectively manage time, coordinate multiple projects simultaneously, work in an environment with constant interruptions, consistently meet deadlines, and be flexible to changing priorities
• Strong computer skills and the ability to use Microsoft Outlook, Word, Excel, and Access to create planning-related correspondence, reports, and presentations
• Strong written communication skills and the ability to prepare technical correspondence, reports, and PowerPoint presentations pertaining to planning principles
• Strong verbal communication skills and the ability to make clear presentations regarding complex planning issues, and communicate effectively with employees and the public in a way that represents a positive City image to the public, employees, and the development community
• Strong customer service skills and the ability to interact with people in a tactful, professional, and helpful manner
• Strong conflict management skills and the ability to effectively address and resolve customer issues at the counter, on the phone, and by email
• Strong work ethic and the ability to conduct oneself in a professional and ethical manner
• Strong interpersonal skills and the ability to develop and maintain effective working relationships with developers, community organizations, state and local agencies, City staff, and the public
• Strong analytical skills and the ability to review and evaluate development plans and prepare graphic displays to illustrate planning data
• Strong mathematical skills and the ability to read figures quickly and accurately and solve mathematical calculations
• The ability to drag, push files, paper, and documents weighing up to 25 pounds
Assistant Planner I Knowledge and Abilities only:
• Strong analytical skills and the ability to review and evaluate planning, zoning, and development plans and recommend workable solutions
Additional Information:An online completed City application form is required to apply for this position. All employment information must be provided on the application. Providing a resume is not a substitute for completing this section of the application. Applications left incomplete, or with a reference to attachments may be rejected. The selection process will include one or more of the following: written exam, technical knowledge assessment, writing skill assessment, and/or oral interviews. Applicants that meet minimum qualifications and are selected for interviews will be required to disclose information regarding criminal convictions. If you require special accommodations to participate in the application/selection process, please notify Human Resources for assistance.
All offers of regular employment with the City of Santa Clarita are made contingent upon receipt of proof of legal right to work in the United States, successful completion of a post-offer pre-employment physical, which may include a drug screen and Department of Justice fingerprinting. Criminal offender information will be reviewed on an ongoing basis. The City uses the E-Verify program to electronically confirm work authorization of newly hired employees. All new employees are required to participate in the DMV Employer Pull-Notice Program. This program authorizes the City to receive a driver record report upon enrollment and during employment. Only degrees recognized by the U.S. Department of Education and accredited by the Council for Higher Education Accreditation will be accepted.
Compensation includes enrollment in California Public Employees’ Retirement System as a replacement for Social Security plus a competitive benefits package. All appointments are made at the “A” step of the salary range unless otherwise authorized by the City Manager.
The City of Santa Clarita is an Equal Opportunity Employer.