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Corelogic Reports a 6.6% Increase in Single Family Rent Prices, Let's Compare to the BLS

Rent prices are exploding according to Corelogic and home prices are doing the same according to Case-Shiller. Let's compare both the the BLS rent index.
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Rent Growth by Property Type

Strong Economic Growth and Fierce Competition

Corelogic reports Strong Economic Growth and Fierce Competition

Year-Over-Year Details for May

  • U.S. Single-Family Rents Up 6.6% on Average 
  • Detached Single-Family Housing Rents Up 9.2%
  • Attached Single-Family Housing Rents Up 3.6%
  • The May 2021 increase in rents was nearly four times the May 2020 increase.

The detached property type tier is defined as properties with a free-standing residential building, and the attached property type tier is defined as a single-family dwelling that is attached to other single-family dwellings, which includes duplexes, triplexes, quadplexes, townhouses, row-houses, condos and co-ops.

As demand for more space and outdoor amenities remains, detached rentals in particular are experiencing accelerated growth with a 9.2% year-over-year increase in May, compared to growth of 3.6% annually for attached rentals.

 Single-Family Rent Growth by Price Tier

National Single-Family Rent Index 2021-05

An uneven U.S. job recovery, sometimes called a “K-shaped” recovery, is reflected in the rent price growth of the low- and high-price rent tiers, with the increase in lower-priced rentals lagging behind that of higher-priced rentals. The low-price tier is defined as properties with rent prices less than 75% of the regional median, and the high-price tier is defined as properties with rent prices greater than 125% of a region’s median rent.

Rent prices for the low-price tier, increased 4.6% year over year in May 2021, up from 2.7% in May 2020. Meanwhile, high-price rentals increased 7.9% in May 2021, up from a gain of 1.3% in May 2020. This was the fastest increase in low-price rents since January 2017, and the fastest increase in high-price rentals in the history of the SFRI.

Boston and Chicago the Only Exceptions

Single Family Rent Index Percent Changes 20 Markets 2021-05

Boston and Chicago were also the only 2 of the 20 metros shown in Figure 3 to have lower rent growth than a year ago with Boston showing a deceleration of 5.4 percentage points and Chicago showing a deceleration of 3.1 percentage points from May 2020.

Case Shiller 

Case Shiller Home Price Index National and Top 10 by City 2021-04

According to Case-Shiller, Chicago and Las Vegas were cities in which actual home prices declined. 

Corelogic vs Case-Shiller and BLS OER

CS National Top 10 Metro CPI OER 2021-06

OER Definition

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OER stands for Owners Equivalent Rent. OER is the mythical price one would pay if one rented their own house from themselves, unfurnished and without utilities. 

OER is the single largest component of the CPI with a weight of 24.26%. 

Percent Change From a Year Ago

CS National Top 10 Metro CPI OER Percent Change 2021-06

OER vs Corelogic Year-Over-Year Percent Change 

  • The BLS says OER was up 2.34% from a year ago as of June. 
  • In May, the BLS said OER was up 2.11% from a year ago.
  • Corelogic says prices are up 6.6% from a year ago.
  • Actual home prices are up 14.59% from a year ago.

Whom do you believe?

A major discrepancy points to a severe understatement of the CPI.

Distortions Abound

On July 16, I wrote The CPI Measures Inflation and Other Widely Believed Economic Nonsense

"The CPI is a piss poor measure of inflation." And It's not even a good measure of prices. 

What is the Best Measure of Monetary Inflation?

Milton Friedman's statement "Inflation is always and everywhere a monetary phenomenon,” is catchy. But it sheds little light on anything especially when people confuse QE with actual spendable money.

For discussion, please see What is the Best Measure of Monetary Inflation?

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