Free market gives apartment owners free reign

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Most Midlanders have undoubtedly been reminded in recent months and years that with economic prosperity and growth, oil booms can also bring greater costs of living.

But until a recent conversation with the Reporter-Telegram, the Permian Basin Apartment Association has typically shied away from publicly addressing the fact that it’s no longer a surprise to see companies ask for more than $1,000 a month to rent a one-bedroom apartment built more than three decades ago.

Apartment rent is typically based on supply and demand, association president Gloria Oliver said during an interview after the group’s monthly meeting on Wednesday. But at the end of the day, the apartment industry is in the private sector, meaning proprietary information — such as true statistics that would indicate supply and demand — is not required to be disclosed to the public.

“They don’t have to tell you anything,” Oliver said, adding that no one holds the industry accountable.

With hesitation and eyes welling up with tears, Oliver reluctantly admitted that apartment owners and managers are not always honest about their occupancy rate — their supply — in market surveys.

“Everybody lies,” she said. “I hate to say that about the industry.”

Market surveys are conducted by third-party firms to provide an economic snapshot of a given industry, often noting supply and demand. There are no consequences for a company that may fabricate proprietary information because, again, it doesn’t have to share anything.

“It’s free enterprise,” Oliver said.

State Sen. Kel Seliger, the guest speaker of Wednesday’s apartment association meeting, addressed concerns of potential government regulations on the industry via rent control. He assured the audience, filled mostly with apartment managers, that they have no immediate threat of new regulations implemented by the state.

During an interview after his speech, he also brought up the “free market.” He believes the economic principle of supply and demand will eventually take care of the issue of high rental rates.

“While rents are going up, if you take a look around, new apartments are also going up,” Seliger said.

A report published by Apartment Finder in October estimated that nearly 1,300 units will be added to Midland’s market before the end of this year.

“When the new apartments come on the market, it will be interesting to see what will happen to the 30 year old properties,” Oliver said, adding that she could not predict whether or not the additional supply will bring down prices.

Seliger added that it’s the government’s role to create laws and policies, as well as maintain and build new roads and schools when needed, for example. Regulating private industries, like apartments, is not the government’s responsibility, he said. But at the same time, private businesses shouldn’t expect government subsidies, he added.

“They’re on their own, too,” Seliger said.

Rent control is more common in larger urban communities, like New York City, he said.

“It’s going to be a lot longer before (rent control) is in Midland or Odessa,” Seliger said.

So for now, property owners are in full control of setting the monthly rent for apartments in the Permian Basin.

“The owner investor has the right to expect a fair return on his investment,” Oliver said. “This is the American way.”

But as the current apartment association president reached for a napkin to wipe the tears falling from her eyes, it became clear that the free market can sometimes hurt.

Oliver was one of multiple former Orion Residential employees who were laid off when Related Cos. purchased the 20 apartment complexes in Midland and Odessa last month that Orion had previously managed.

“We have to work for a living, and we have to do what the owner wants,” she said with a sorrowful expression that spoke louder than her words.

Oliver said she is only recently able to speak candidly about the apartment industry because virtually every apartment owner and investor asks employees to avoid speaking to the media about controversial topics, like rent control or increasing rates. She admitted that her comments may make it more difficult to get another job in the industry, but she still was compelled to share her experience.

Most recently, Oliver managed the Forty Four Hundred Apartments near Andrews Highway and Midland Drive. Before that, she managed two other complexes in Midland for about five years total. Rents were not nearly as high five years ago than they are today, she said. And on countless occasions throughout her tenure in the industry, Oliver was the person tasked with informing residents that their rents were going up — again.

“You can’t blame the residents for being upset,” she said. “How can you look someone in the face and tell them their rent is going up $100 or $200 a month?”

Knowing that not every Midlander works in the oil industry with high wages, Oliver said it was heartwrenching to tell a mother, for instance, that her expenses would now be even higher than before.

“It’s your home; it’s where your babies are,” she said, again, with teary eyes. “When mama bear loses her cave, she’s going to fight for it.”

But Oliver said there shouldn’t be a fight and the facts are clear: Not everyone can afford the inflated apartment rates.

While few would argue that the oil industry is not the backbone of Midland’s economy, the local apartment association president said it’s imperative to remember that there are other members of the community — like nurses, retail store clerks, fast-food workers and teachers, for example.

“It takes more than the oil field to make a town,” she said. “Without everybody, we no longer have a town. Everybody deserves to be able to afford a home. That’s been forgotten.”