insiders know ...

[march 2025 roommates]

We'd categorize most roommate groups as either traditional or non-traditional.

All of one list above isn't required, just most.   However, across our usual wide variety of roommate groups, most have been much more one or the other, for a few years now.

SO, until recently . . .

. . . our one-and-only index of average roommate rent and how much you could save compared to a 1BR was the average cost of a 2BR ÷ 2. Just like smartasset.com.  So here is a bird's-eye view of those roommate dollars.

And until a few years ago, this traditional index would have been close to average for both categories, or almost everyone. We've always heard from non-traditional roommate groups as well. However, since they were previously in the minority but similarly priced, they didn't skew the numbers that much. Before.

But the roommate landscape shifted. Rising rents and an affordable housing shortage in most cities gradually multiplied the differences between the two. Then, pandemic.

Traditional roommate rents went up, but so did the number of homeowners renting rooms, along with working from home. The disparity between traditional and non-traditional roommate groups is now large enough that it no longer makes sense to average them, then declare that the whole story.

Real estate companies are able to monitor rentals of entire units, or the purchase of real estate, because those numbers are reported to the government and the census. If you're renting a room in an owner-occupied property, these same agencies can't "see" you or exactly how much you've paid in the same publicly-accessible way.

Hence, non-traditional roommate groups fly under most real estate radar.

affordable housing shortage

Now, the "depth of the housing shortage" and the suddenness of Covid-19 and inflation have tipped smaller cities into an affordability crisis."

While spending >= 30% of income on rent means "rent-burdened" due to likely difficulty affording other life necessities, it's the "new normal" in many US metros.

"The US is now rent-burdened nationwide for the first time."

Economists say "the fundamental issue" is that the country does not have enough homes where people want them. ... The shortage has driven up costs for buyers and renters alike—most spectacularly in megacities such as Los Angeles and New York, but pretty much everywhere at this point."

remote equity rentals

Amid a national housing crisis, giant private equity firms have been buying up apartment buildings en masse to squeeze them for profit ... snapping up rentals by the thousands," along with "tens of thousands of single-family homes lost to foreclosure." This means more remote landlords in major American cities, according to ProPublica’s analysis.

This puts upward pressure on rent prices for everyone, pushing up the cost of renting and driving down affordable housing stock. Meanwhile, many so-called mom-and-pop landlords have been displaced by corporate players. All tenants pay more, while the only ones benefiting from soaring rents are out-of-town investors.

"What the real estate industry won't tell you" is that as the ratio of investor-owned houses to live-in buyers rises, the investors get more tax deductions but prices skyrocket for everyone else." "Housing is getting less affordable for everyone at every level," says Daryl Fairweather, chief economist for Redfin.

"Such firms use economies of scale to more aggressively squeeze profits from their buildings" than live-in or even local landlords usually do, tenant advocates say. "The firms’ tactics can include sharply increasing rent or fees and neglecting upkeep."

"In contrast, so-called mom-and-pops usually look for steady streams of rental income over time while their buildings grow in value."

Meanwhile, living with roommates to whom you rent rooms can be reasonably profitable, but only reasonably. So if you own a property good enough for roommates, you can rent part of it out. That's reasonably profitable, and reasonable property owners and reasonable roommates could be happy together.

But investors demand high yields, not reasonable places to live. Investors always want to push past reasonable. Since investment property tends to change hands, each time with someone new taking another cut, ultimately it inflates well past property taxes alone.

robot landlords

And now it's not just remote! It's robot!

Robot landlords are essential.

Charging rent remotely wouldn't be comfortable without automation overlay for all the tasks local landlords previously handled. If robot repair requests are actually honored, they're outsourced to local contractors, who may take their time. Many tenants have been disappointed in their robots' lack of responsiveness. Every attempted complaint sent them down a rabbithole of absolutely no one willing to take responsibility for anything other than charging rent.

The robot landlords control you and their properties using apps developed to assist Wall Street investment firms and real estate developers. So that's a huge help to anyone looking to charge from afar without showing up.

But it's a lot less helpful to anyone looking for affordable housing. The apps allow real estate developers to charge all the fees, but now with next to none of the employees.

Housing advocates say long distance real estate run remotely from afar pushes "lower and middle-income Americans" out of homeownership by buying up the kind of older, 1,000-square-foot-ish houses once affordable to first-time homeowners and inflating the market with investors."

Or once affordable for roommates. Because many of those might have been purchased by someone with enough for a down payment, but would prefer help with upcoming monthlies. That person could charge roommates less while still paying all their own bills.

But when multiple absentee landlords take their cut from a roommate situation, it becomes more difficult for most to live there.

owner-occupied roommate groups

question: So, are roommates really that different than inflation in general? Or to the extent they are, won't the market still correct itself at some point, even if the inflation is driven by away investors?

answer: Sure, roommate rents rise with general inflation. And roommate rents can fall when inflation does as well. But remote real estate speculators could extract a lot of value from you and your roommates before that happens.

If investors think they can extract more value from you in the future, they'll try again. Out-of-state investors are pushing for "rent hikes that outpace wages and inflation," say a tenants' rights movement pushing for rent control.


question: So, is supporting a live-in landlord really that different than supporting several remote ones? Homeowners are extracting value from roommates too, right?

answer: Sure, homeowners are extracting value. But they're usually putting a good bit of it back into where you collectively live, as conditions there affect them too.

For your larger roommate community, support of owner-occupied housing keeps a higher percentage of housing affordable for everyone. Assisting someone who owns their home or is working on a mortgage but still living locally is more clever for you both than donating money to away investors.

On the strictly selfish front, when landlords are live-in or even local to the roommates they charge, it puts the brakes on a lot of bad behavior.

Certainly not all.

But a lot.

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