How the Affordable Housing Revolution Will Tend to Sink the Existing Rental Home Industry

© Mark McWiggins 2024

This is a fictionalized conversation between the CEO of a local real estate agency, Biff Stone, and his deputy Lisa D. Good.

Lisa came in one morning recently with a hangdog espression and Biff, semi-concerned CEO that he is, asked “what’s wrong?” Lisa shook her head and said .. “I watched a few Youtube videos last night and it looks as though we have a serious problem.”

Biff internally shook his head because although he found Lisa to be a very valuable employee, she tended to be a little overly dramatic at times.

Not this time, though … as Biff absorbed the news from Lisa, his face grew even longer. Here are a few of the YouTube Videos she showed him:

There are a bunch of these, but this second one really is the one that spells … if not doom, declining revenues over time for any rental agency that can’t smell the eggs cooking.

If one can buy one of the Boxabls for $50000 and rent it for $550 or so, and the standard type of rental for a 1920 slightly converted farmhouse is $2079 (it is … this is where I live) … how does a realtor keep his or her lights on?

If you can’t beat ’em, join em!

There’s a standard way of dealing with a market disruptor like this: first, match (or beat) the disruptor’s price any way you can. If the realtor was renting a 2 br apartment in the city of Portland for $850, but this cute little modern place is only $550, well … the solution is obvious.

The realtor will have to raise enough capital first to do a prototype installation with a few trusted confederates who could be compesated to move temporarily to these Boxabl Casitas (and similarly priced tiny homes) to check them out and make sure they work as specified.

Then when they do check out, put them for rent at or (slightly) below the example in the video … this should keep the market from getting away from any Realtor who is so affected.

What about those of us renting the slightly run down 1920 farmhouse? The realtor could offer us extra incentives to stay, for example:

Solar panels and backup power … we get storms pretty regularly around here, especially in November. We do live in town now and not in the (relative) sticks like we did two houses ago, where it seemed the power went out every time it rained. So it shouldn’t be out for days (in cases where there wasn’t some huge event like a tsunami, heaven forbid), but still, in my book, the best power outage is no power outage.

Other possible incentives: upgrading our woefully inefficient heating system … and reducing our deposit requirements.

That’s it! Market disruptors come for the wicked and the just …