Inflation tells

Apart­ment rents fell in every ma­jor met­ropolitan area in the U.S. over the past six months through Jan­uary, a trend that is poised to con­tinue as the big­gest de­liv­ery of new apart­ments in nearly four decades is slated for this year.
Renters with new leases in Jan­uary paid a me­dian rent that was 3.5% lower than they would have paid last Au­gust, ac­cord­ing to es­ti­mates from list­ing web­site Apart­ment List. It was the first time in five years that rent fell every month over a six-month pe­riod, ac­cord­ing to the same es­ti­mates.

In other news:

Rents have re­treated along­side re­cent de­clines in home-sale prices, which fell 3.6% be­tween June and No­vember, ac­cord­ing to the S&P Core­L­ogic Case-Shiller Na­tional Home Price In­dex. Higher mort­gage rates and soft­en­ing buyer de­mand have been weighing on home prices, de­spite a pe­riod this year when lower rates sparked an uptick in buyer in­terest.

Perversely, cumulative rents still appear to be increasing because they are year long contracts (at least), so even though “new” rental prices are declining, there is enough hangover from those signed six-12 months ago that there is the illusion of increase. (In some markets and situations, obviously, they may still be increasing.)

Anyway, green shoots. Or black shoots. Or shoot, whatever shoots.


Good news. In six months rents will hopefully no longer pressure inflation.



Goofy I saw a recent Yahoo article on housing prices. I do not remember if the article was written by Yahoo. The jist of it in the second have of 2022 house prices fell more than in 2008. The problem though is housing prices rose in January because of a severe housing shortage. It is unclear if the pressure on supply will see a follow through in rising housing stock prices. The best financial minds in the industry think prices will rise.

Of course rents would follow. January is only one month’s results but what happened in 2022 may not follow through in 2023.

adding, the news just posted here on subprime car loans tells us household incomes v expenses are in big trouble. This can mean lower rents going forward. Demand is being cut.

How does demand for rental housing drop when households are in financial difficulties?
Seems to me that there will be increased demand for rental and less for buying. Families have to live somewhere.
I don’t know why that means lower rents. I expect rental prices (like housing prices) are very location dependent.

More people tend to double up. Young adults that recently moved into their own place might move back into Mom&Dads place. People who got tired of flatmates moved into their own place now decide that they need a flatmate again. Etc.


People go to lower and lower rents. Instead of saying, “I think I can afford this”. People will say, “I need to look elsewhere even if that means going out of town in the boonies”.

If there is relatively less in your wallet to spend you find a lower priced good. The landlords are competing with each other.

Only to a point. Same with doubling up by young adults. For families, there is not so much choice.
And I’m not sure there is actually an adequate supply of low-cost rentals or housing.
It seems every city is calling for more ‘affordable’ housing.

And moving out of town is not necessarily cheap either for a family. Uprooting the kids, new schools, new doctors etc.

At some level you are saying the market will provide lower cost housing for families, but I’m not at all sure that’s a given.

Housing is like food. Everyone needs it and you can only go so low before the supply runs out.

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Fair enough but higher rents at every point on the ladder will go begging. Or the higher rent at a lower peg on the ladder will be the substitute.

If someone could afford $2300 per month, when their lease is up they may shop $1600 per month. In many markets the option will be available. If the top of the market starts to tumble there will be a reaction down the ladder.

Higher prices beget higher prices…till they dont.

To be frank, I’m on the fence about housing prices falling. I do not have a clear sense of direction for housing and rents.