Below is a chart and brief excerpt from today's Early Look written by REITS analyst Rob Simone.
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First, the U.S. Census Bureau tells us that roughly ~35% of all occupied housing units in the U.S. are renter occupied. So we have one bureau telling us it receives a ~25% weighting in CPI, and another telling it should be 35%. Well, which one is it? My money would be on the higher figure… Second, and the Macro Team has done a fantastic job talking about this, it is important to think about the lag effect. If you assume a ~12 month average lease term for residential leases, the July national rent figure includes lease rates transacted from the July 2020 – December 2020 period when rental rates were dropping so dramatically (particularly in major Coastal Gateway markets) that the overall rent inflation plummeted. The second derivative of that number just recently inflected in April/May 2021. |
