August 26, 2006

The Paradox of Craigslist

So I've moved to D.C. and, after a week of nonstop and mostly frantic searching, finally found a decent place to live in a gentrifying neighborhood that seems nice enough. For that we can all thank Craigslist. And since it's too hot to do anything else today, I may as well write some posts. So let's start by talking about… Craigslist.

I've now used Craigslist to find housing—by which I mean roommates offering a room in a group house or apartment—in four different major cities (New York, Boston, San Francisco, D.C) over the course of about five years. And it's becoming… progressively more difficult. More and more "sellers" are using Craigslist these days, which sounds good at first, because that means there are more options for the apartment-seeker. But there's also been exponential growth in the number of seekers, too. You would think this makes the overall market more efficient, but I'm not sure.

Five years ago, when I was looking for a place in Brooklyn, I could reply to a week's worth of ads and get replies from each person. The people offering housing were only receiving about fifteen or twenty replies per post, after all. But nowadays, you put up an ad offering a room in your house and get 150 replies, minimum. So you can't reply to everyone, and have to spend time selecting maybe 20 or so folks to meet in person. Odds are you'll stage an open house, where you can meet everyone in a single afternoon and try to see who would make a good roommate.

But for certain apartment-buyers, open houses can be excruciating. Everyone there is jostling to appear more outgoing and fun than the next guy, and the traits that make you successful at getting recognized and liked at an open house aren't necessarily congruent with the traits that make you a good roommate. (Bribes are also not uncommon at open houses—baked goods, especially.)

Now I didn't mind so much, but I imagine this can all deter many "buyers" from even bothering to check out certain places. And "sellers" can, conceivably, get bad matches from open houses (since they're meeting everyone very quickly and getting a potentially misleading impression). But the alternative to an open house is to schedule one-on-one interviews with multiple roommates—which can take way too much time.

The end result is that people get desperate—especially buyers, who find that they are not getting many replies to their inquiries, and getting rejected after many interviews—because there's so much competition—and end up accepting the first place offered, especially if they need housing by a certain date. (This happened to me, although I'm very happy with my pick.) So people may well often settle on suboptimal living situations.

Now I don't think this is very different from other types of markets (although I imagine the old newspaper-ad days had fewer people replying to each ad, and so avoided the problems mentioned above), and in truth, it all works pretty well, but Craigslist may have been better from the buyer's point of view five years ago, when fewer people knew about it. In other words, maybe Barry Schwartz is onto something.
-- Brad Plumer 6:28 PM || ||