Stu Whitney follows up on my story last week on the sharp decline in building permits in Sioux Falls and statewide and reports NSU prof Aaron Scholl’s forecast of continued trouble for South Dakotans seeking affordable housing:
The trend will likely filter down to demand for existing properties, as high interest rates make homeowners think twice about selling and having to enter the market themselves, said Scholl, who described the scenario as a “wedge between aspiring homeowners and homeowners who locked in historically low rates.”
…“Access to affordable housing is part of this,” said Scholl. “If we see these listing prices and the housing market sustained and building permits falling, that translates into the rental market, which affects government budgets and the resources that are devoted to help individuals that have a tough living situation” [Stu Whitney, “Sharp Drop in Building Permits Points to Stagnation in South Dakota Housing Market,” South Dakota News Watch, 2023.10.05].
If South Dakota’s population is growing, there must be demand for new places to live. But the market continues to balk at providing supply.
One is able to hope (a dubious word choice) – that the mortgage interest rates and housing slow down will crater the faux motel short term rental market and corporate ownership of single family homes.
Step right up! You too can secure a mortgage interest rate north of 700% (not a typo): https://www.classaction.org/news/class-action-says-theloansmith.com-operates-an-illegal-rent-a-tribe-loan-scheme
And the greed keeps coming:
“At the heart of the matter, the suit says, is that prior to RealPage’s dominance in the rental software market, competition drove pricing through a strategy called “heads in the beds,” which operates under the premise that having occupied units—even if you have to offer rent specials and reduced rates—is preferable to having units sit empty. That natural response to fill vacancies would keep rents at a manageable, more affordable level.
But RealPage’s software, the complaint alleges, worked in two ways to artificially inflate rent rates. It eliminated the market fluctuation that the “heads in the beds” strategy created and discouraged users from deviating from the pricing recommendations the company provided. Secondly, the suit says landlords are provided information on how to collude to stagger lease renewals by allowing units to sit vacant for lengths of time to keep rents higher and avoid over-saturating the market with available rental units. By doing that, it said, it would appear that fewer units were available and demand was higher, which in turn justifies a higher market rate for rent.”
https://www.dmagazine.com/frontburner/2022/10/realpage-landlords-sued-by-renters-after-propublica-story/#:~:text=The%20class%20action%20suit%2C%20which%20lists%20California%20and,to%20set%20rental%20prices%20and%20manage%20lease%20renewals.