Global Economics

Rent Goes up in 89% of Major Markets: Surprising RENTCafé vs CPI Stats

Analysis by Yardi Matrix shows rent prices increased month-over-month in 89% of major markets. Let's compare to the CPI.

The RENTCafé in conjunction with Yardi Matrix says Same Trend, Different Year: January Brings Further Rent Increases, Fueled by Demand.

The priciest cities for renters remain big urban job centers on both coasts, with Manhattan, NY at the top of the list with an average apartment rent of $4,079, unchanged from the previous month and down slightly by -1% over the year.

If renters living in The Golden State where hoping for a respite from high rents in the new year, they’re not getting it yet. Prices went up again in January in all 5 California cities in the top 10 most expensive for renters, with the highest rates in the state being in San Francisco, $3,448/month. Jersey City apartments, the sixth most expensive in the U.S., also saw increased rates this month, reaching $2,855.

Wichita, KS, Tulsa, OK, and Toledo, OH remain the country’s top 3 most affordable cities for renters, alongside 7 other Midwestern and Texan towns where average rents do not exceed $730/month, a fraction of the prices in coastal cities. In fact, things have been quiet in these parts of the country, as rents remained flat or grew slower than the national average in 9 out of 10 cities. Fort Wayne, IN was the only one to see a significant jump in prices for the year, 4.5%.

Key Takeaways

  1. The national average rent was $1,361 in January 2018, 2.8 percent higher than this time last year, and flat month over month, according to data from Yardi Matrix.
  2. 89 percent of the nation’s biggest cities have seen rents grow in January, in 9 percent of cities rents remained unchanged, while only 2 percent experienced rent drops compared to 2017.
  3. America’s smaller cities are continuing to see the greatest increases, with Gilbert, AZ (8.5%), Roseville, CA (8.5%), and Fort Collins, CO (7.9%) breaking the top 10.

Whoa Stop!

Please re-read point number one.

I received the article about a week ago from the RENTCafé but held off writing this article until today over concerns about the national average.

My contact confirms the national average is a weighted average, not simply an average of all the markets straight up.

In simple terms, New York has more weight in the national index than Chicago. In turn, Chicago has more weight than St. Louis. The same applies within smaller geographic areas.

This is exactly as it should be, and it stopped me in my tracks. The following chart will explain why.

CPI OER vs. Primary Rent

National Rental Increase Estimates

The RENTCafé data is for January but the BLS data is for December. Assuming the data was reflective of December, the reported CPI would have declined a fair amount.

CPI data for January is due February 14. At that time, we will be able to calculate the actual impact if the BLS was to use Yardi Matrix data instead of its own.

The preliminary indication is the CPI would be lower and this is contrary to expectations given news that rents rose in 89% of major markets.

Mike "Mish" Shedlock

18 Responses

  • Stuki

    Feb 8, 2018

    While the cost/performance for cellphones, cars, TVs and any other goods for which markets exhibit even the tiniest sliver of freedom, continue to drop……

  • wootendw

    Feb 8, 2018

    Off topic. BlackPat scandal? https://www.youtube.com/watch?v=fVtYT2itKuE

  • Bohm-Bawerk

    Feb 8, 2018

    Satire you realize?

  • themonosynaptic

    Feb 8, 2018

    Cellphones, cars, and TVs are subject to improved technology ... renting a house isn't. Are you measuring freedom or ingenuity? (Sorry, I have to explain simple economics to Reps/Libertarians - it is my burden).

  • stillCJ

    Feb 8, 2018

    It would seem the housing market is getting tighter, so supply & demand basics means higher rents.

  • stillCJ

    Feb 8, 2018

    1.Harder & harder & more expensive to get a building permit

  • stillCJ

    Feb 8, 2018

    2.More inner city areas becoming unlivable and being demolished.

  • stillCJ

    Feb 8, 2018

    3. Construction costs keep going up.

  • stillCJ

    Feb 8, 2018

    sorry the last one was posted as #3 but maven kept changing it to #1. #4 Real estate taxes keep going up.

  • Carl_R

    Feb 8, 2018

    Of course technology can play a part in rent. Improved construction techniques can be applied in construction, for example, especially in insulation. This, in fact, is a problem with looking exclusively at the rent. The real cost of living in an apartment is the rent plus the utilities. Say you have two apartments to choose from. The first is $1000/month to rent, and gas/electric run $300/month. The second is $1100/month, but gas/electric only run $75 due to better insulation. If you move from the first into the second, your "rent" goes up from $1000 to $1100, but your cost to live there falls from $1300 to $1175. Is that inflation (since the rent went up), or deflation (since the total cost to live there fell)?

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