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Why apartment rents in D-FW are getting more like airfares

Real Estate

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If you’re a renter in Dallas — particularly if you moved here from California, where combing through Craigslist posts is a rite of passage — you’ve likely experienced the disorientation that comes with apartment-hunting in one of the nation’s fastest-growing markets.

Plug in a few criteria on websites like, and you’ll get pulled down a rabbit hole full of vaguely enticing descriptions of pools, fitness centers and luxury interiors. Accompanying those descriptions, though, is a sometimes puzzling tangle of rental prices.

It’s all part of a shifting landscape in which rents are set more and more like airfares, changing daily in response to huge amounts of information.

“No one sets rent for more than a day anymore unless the property doesn’t lease up,” said David Kahn, Dallas-Fort Worth senior market analyst for the real estate data firm CoStar, which bought in 2014.

The Dallas Morning News spoke with Kahn and other experts about what’s driving the changes and got some tips for the next time you’re shopping for a place to live. Here’s what you need to know:

Why do rents vary so much, even within the same complex?

The reasons one apartment costs more than another with the same floor plan in the same building are sometimes intuitive.

“A top floor is going to go for something different if it’s overlooking the pool rather than overlooking the dumpster,” he said. “Whether a property is being developed or redeveloped — that’s kind of baked into what the rents are set at.”

Like in any industry these days, though, the ability to harvest and process vast amounts of data allows property managers to get a lot more specific.

Large property managers use price optimization programs that constantly take in data about everything from how many apartments are expected to open nearby to vacancy rates across the region.

Kahn said that although property owners and managers can decide just how minute they want to get with their price optimization inputs, “it’s an imperfect science.”

That’s where humans come in.

“At the end of the day, the computer is a tool and just that,” said Rick Graf, president and CEO of Pinnacle, a Dallas-based company that manages about 18,000 apartments in Dallas-Fort Worth and 165,000 nationwide. “We can’t turn our brains off.”

What’s up with those lease renewal menus you get from big landlords? How do they decide when to make an eight-month lease cheaper than a 10-month lease?

On a gut level, it makes sense that a longer-term lease would be cheaper than a short-term one. Having a reliable revenue stream for longer is preferable to having an empty apartment.

But how do you explain it when rent for an eight-month lease is less than a nine-month lease?

Kahn of CoStar said that if you want to crack the code, look at when those leases would end. The lower the rent, the more likely it is that your landlord will be able to find a new tenant who can pay more rent when your lease is up.

“There’s a huge seasonality effect in D-FW and a couple other metros,” he said.

Landlords try to avoid having to find tenants during the holidays and in the winter months more broadly. Kahn cited a report by CoStar founder Andrew C. Florance that found the day after Thanksgiving — Black Friday — is when rents across the country hit their lowest points of the year.

“No one wants to move during Christmas or during December,” Kahn said.

Summer is, perhaps unsurprisingly, the worst time to scope out a new place.

Ultimately, said Jeff Cronrod of the American Apartment Owners Association, it comes down to minimizing downtime and finding good tenants.

“Turnover expense is huge,” he said. “We want to keep a tenant and keep them happy.”

How has the use of price optimization evolved in rental housing? Why is it such a thing in Dallas-Fort Worth but less so in other markets?

Cronrod said price optimization has always been around in some form; it’s just a “fancy word for doing the best we can.”

He says he’s been a landlord for 40 years.

“We used to go door to door — I’d visit the competitors around the corner,” Cronrod said. “I feel like a dinosaur.”

But all the new ways of accessing data have “leveled the playing field,” he said. There are online rent calculators for smaller landlords or property managers. And renters, too, can compare prices.

Graf of Pinnacle said the company started using YieldStar, a third-party price optimizer, about a decade ago. He said Pinnacle also has in-house pricing advisers who work with leasing agents.

Back then, he said, it was during the downturn when, “frankly we were trying to minimize the rent decreases.”

Now, he said, the situation has reversed, with landlords in relatively unregulated markets like Texas pushing rent increases as far as they can — although Graf said the volume of new units in neighborhoods like Uptown has softened the sharp rise.

Dallas-Fort Worth’s ballooning supply of apartments in large complexes, Kahn said, makes it the perfect place for landlords to make use of hyper-specific rent optimization.

He said that’s true of fast-growing Sunbelt metros, like Atlanta, but less so in places where rents are more heavily regulated and the apartment supply is older, like in California.

Companies that manage 5,000 or more units in D-FW control a combined 243,800 units, or about 36 percent of the region’s whole market rate inventory, Kahn said in an email.

“That speaks to the institutional nature of apartment management in the metroplex,” he said.

How can I make sure I’m getting the best deal on an apartment?

Ultimately, Kahn, Cronrod and Graf gave advice that was old school:

Do your homework — just like when you look for airfares.

Kahn recommends always visiting or touring the complex you’re considering. And ask for deals when you get there.

“The rent’s never really bottomed out until it is. There’s always something extra that can be thrown in,” he said. “When you go to the property management website and you apply, sometimes they will have something different in the actual application portal, and it might be a big difference.”

If you’re using a free apartment shopping consultant, be aware that they’re making commissions from the landlord, which means you’re ultimately footing the bill — whether you’re missing out on concessions or paying a slightly higher rent.

And Kahn also let slide a tip that he joked his clients might not want him to mention: Always put in your 60-day move-out notice before your lease expires, even if you think you might renew.

Kahn also advised checking rents daily at any properties you’re interested in.

Cronrod said for younger or otherwise cash-strapped prospective tenants, it may be worth asking about a contract guaranteeing your lease instead of a traditional security deposit, which can be a big strain for renters, even if they have a steady income.

Graf added that — just as when you’re buying a house — look on social media or ask people about the area where you might be moving. And since traffic can be rough in D-FW, make sure you drive your commute during rush hour.

“Traffic on weekends is very different from the week,” he said.

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