It's time to pull out Jimmy McMillan's slogan for his 2010 New York mayoral run: “The rent is too damn high.” But today, the slogan applies across the country as renters feel the squeeze.
The median monthly rent in May hit $1,849, a 26.6% increase since 2019 before the pandemic, according to Realtor.com’s Monthly Rental Report.
“Single-family rents continue to increase at record-level rates,” Molly Boesel, principal economist at CoreLogic, said in a statement regarding its Single-Family Rent Index (SFRI) report. “In April, rent growth provided upward pressure on inflation, which rose at rates not seen in nearly 40 years. We expect single-family rent growth to continue to increase at a rapid pace throughout 2022.”
During the pandemic, rent moratoriums and rent assistance programs helped renters who were laid off stay in their apartments. With the expiration of those programs, rent affordability is becoming a crisis with rising inflation.
Where you live will determine the amount of your rent hike. In Miami, rent increases are averaging 40.8% with Orlando seeing increases of 25.8% and Phoenix 17.8%....
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These "record-level" increases are not being captured in the CPI inflation reports.
The May CPI report released on June 10 had overall headline inflation at a 42-year high of 8.6% but only had shelter price inflation at 5.5% and Owner's Equivalent Rent at 5.1%.
See Table 2 of the June 10 release , detailed expenditure categories for the gory details.
This wouldn't be so important if we were talking about audio equipment weighted at 0.072% of consumer expenditures, that category could triple in price and it wouldn't matter in the total number. On the other hand shelter's relative importance weighting is 32.437%, the largest single category weighting so when the CPI doesn't reflect the weekly reality of the higher-frequency reports the entire CPI is underestimated. And from the looks of it you should add 4 - 5% to the headline number to get a truer picture of what people are actually spending.
Finally, the argument that people are substituting down to lower price items i.e. beans for beef, doesn't hold much water when you are talking shelter, heating, electricity, gasoline etc.
