The Best Times to Rent: Apartment Dynamic Pricing Patterns

“You should always buy plane tickets on Tuesdays,” my friend tells me.

Or was it strictly business hours in the first half of the week? Conventional wisdom abounds on the ideal times to purchase a flight, as consumers have long known that airline prices tend to change from day today and sometimes even more quickly. Airlines are hardly alone in employing these tactics though; many e-commerce sites also use dynamic pricing to respond to fluctuations in demand by adjusting prices algorithmically.

Should you always buy plane tickets on Tuesdays? As a result of these dynamic pricing methods, some services have leveraged their data to help consumers pick good times to buy (Kayak and Bing, for example, try to forecast flight price movements in part using query volume.)

Is there a best time to rent an apartment? At the end of last month, an article from Time Magazine examined how apartment prices, too, can change rapidly. Take a look at the infographic below, and read on to find out when you’re more likely to find an apartment deal:

kwelia_lease_infographic_04

First, how prevalent is dynamic pricing in the apartment industry? Estimates suggest that roughly 20% of apartments nationwide use some form of revenue management software to adjust prices. Upon examining the relationship between apartment pricing and time from a sample of more than 1.5 million listings selected from our national database, we found some patterns.

Much like airline tickets, there are ideal days to find an apartment — while Sunday and Tuesday were the most expensive days, Monday and Friday were the least expensive. Furthermore, the time of the month makes a difference. Prices rose throughout each month by about .4% total, with the majority of that increase occurring between the first and second weeks of each month. Similarly, there are more and less expensive months in which to rent. We found that prices are lowest in January, rise consistently until August, and hold steady through the end of the year. At their summer peak, prices were nearly 4% higher than in January.

So when should you rent? If you can afford to be flexible on timing, look for listings around the beginning of the new year. In general, stick to the first week of the month, and preferably look on a Monday or on a Friday. Of course, you can also always sign up for our free apartment ratings tool to find great deals using our statistical models. Happy hunting!

5 thoughts on “The Best Times to Rent: Apartment Dynamic Pricing Patterns

  1. As a former real estate agent in NYC, I can say some of this information definitely does not apply here! Particularly the cost of rent over the year — rents are highest in the Summer and early fall but by November the busy season is over and costs are typically lower.

  2. Dynamic pricing could get these markets in trouble to the extent volatility is the outcome. Day-to-day prices for the same rental unit can vary by hundreds of dollars. Dramatic swings in a day’s time really stretch the credibility of supply and demand. It’s possible that the dynamic pricing software (revenue management or RM) could contribute to higher rents in the long run. This could end up trapping low-income renters who can’t afford to relocate while at the same time eventually train consumers who can afford to do so to wait out today’s price on the hope of a better price tomorrow. Those that have adopted dynamic price strategies may be disadvantaging consumers who cannot possibly compete with these multi-million dollar real time data crunchers. Widespread adoption of these high-speed, real-time revenue management tools could end up bringing about distortions in the market that result in added pressure on lawmakers to introduce price controls.

    High-frequency trading on Wall Street has been criticized for its potential to spur sudden, unforeseen market changes. Dynamic pricing strategies, while relatively benign in the airline, hotel and e-commerce realm, may be another thing entirely when applied to essentials like housing. I don’t think it’s a good idea because there’s too much potential to drive a rental market bubble and/or general cost-of-living inflation. Homeowners will in turn raise the cost of their homes as rents rise, employers will be under pressure to pay more to compensate for local cost of living trends, lawmakers will be pressured to increase minimum wage, and many other repercussions are likely to follow. Perhaps the worst of those is the potential for creating short term gains to large-scale property investors at the expense of long-term sustainability. If the rental market is bifurcated between those who can’t afford to take their business outside the dynamic pricing sphere of influence and those consumers who can afford to sit on the fence in the hope of better rates, it is possible that the pool of qualified market participants will shrink and that areas that have adopted this practice over the long term will see property value losses (blight). The convenience of technology is tempting but the wisdom of relying upon automated solutions is at best highly experimental. I don’t think you can extrapolate how dynamic pricing has benefited the airline or hotel industry to how it will benefit consumers. For the most part, these revenue management platforms wouldn’t be successful if the “house” didn’t enjoy the advantage. Finally, proprietary RM tools may make it difficult for small-scale landlords who can’t afford the cost to compete in markets that are increasingly dominated by high-speed pricing practices.

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