Residential Asking Rents and Time on the Market

Abstract

Landlords offering a house in the rental market face a difficult strategic pricing decision. The revenue maximizing decision for the landlord involves a tradeoff between the rental rate and time on the market. Because the turnover of renters is higher than owners, and because the landlord must bear some carrying costs on a vacant house, pricing the rent too high may decrease revenue due to a higher vacancy period and pricing it too low may reduce the revenue when occupied. While there is substantial research on the relationship between listed prices and time on the market for freehold interests, this is the first study to provide empirical evidence on the relationship between asking rent, contract rent and time on the market for single family residential rental (leasehold) property interests. We present two models; a rental price model and a duration model for time-on-the market. Using data from the Dallas–Fort Worth area we find that landlords who set a lower asking rent relative to predicted rent can expect a shorter marketing period for their properties. The results also indicate that overpricing the asking rent and then lowering it at a later date leads to a longer marketing time (after the reset) and often a lower rent. These finding are reasonably robust for low-, mid-, and higher-valued rental properties. Copyright Springer Science+Business Media, LLC 2009Time on market, Duration model, Hedonic model, Atypicality, Residential rent, Asking rent,

To Sell or Not to Sell: Measuring the Heat of the Housing Market

“…The effects of list prices on marketing time found here are larger than similar effects documented by other studies (Belkin, Hempel and McLeavey , Kang and Gardner , Yavas and Yang , Knight , Anglin, Rutherford and Springer and Allen, Rutherford and Thomson , for example) . Due to unobserved heterogeneity, however, it is likely that results from previous studies understate the impact of list prices on marketing time.…”

The role of spatial and temporal structure for residential rent predictions

“…This is because Switzerland has a last price of the (series of) re-advertisements is considered as the contract price, with the previous advertisements being ignored in the forecasting application. 23 For extensive discussions of listing prices, contract prices, and market prices, refer to Allen, Rutherford, and Thomson (2009), Anglin, Rutherford, and Springer (2003), and Knight (2002). high percentage of renters.…”

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“…(Yavas and Yang, 1995, Knight, 2002, Anglin et al, 2003 have shown that in the selling market a house with a higher asking price generally takes longer to sell, particularly in thick markets. This has been confirmed in the rental market for single family housing by Allen et al (2009). Merlo and Ortalo-Magne (2004) have also looked at posted price changes and found that when reductions in asking price occur, they are generally substantial rather than incremental.…”