Saturday, May 12, 2012

They Just Aren't Making Any More... Rental Properties

The following chart shows the CPI for rent of primary residence compared to the overall CPI. I've reset the base year for both series to be December of 1914.

Click to enlarge.

Oops. Maybe they are making more rental properties. I stand corrected.

This post inspired by Troy from the comments of a previous post.

See Also:
They Just Aren't Making Any More... Phasers

Source Data:
St. Louis Fed: Custom Chart


Troy said...

This does show that housing costs are decoupled from inflation in the larger economy.

Which is as it hopefully should be, since the sunk costs in the land component are fixed (and minimal for many landlords anyway), and the housing good itself has minimal current costs other than debt service and maintenance, the latter being minimal really. Taxes aside, of course, though those Howard Jarvis mofos fixed that for California.

The same apartment in LA I rented in 1990 rents for 2.5X that now, which is odd since the actual services it provides has not changed since then, nor has its current "cost of provision" increased anything near the $1000/mo it costs more now.

Housing is certainly a durable good! I am reminded of this picture from the 1980s. All that stuff is junk today, but the apartment my parents were renting even before then is still soldiering on, collecting 4X the rent it did then.

Supply is relatively fixed compared to demand in all desirable places, but this chart does show that landlord does have to compete with higher-priority life expenses like food, education and medical costs, and taxes. Rent being the dominant monthly expense in the lower quintiles' life, it cannot (?) inflate as much as smaller expenses, either.

But having a place to live on this planet is a pretty high-priority life expense!

The median rent is $1000/mo now. It's basically the "rake" in the system, to use a card casino term.

My life was much much more pleasant before I unfortunately learned of the massive socio-economy injustice of rent-seeking in land. It's 20-30% of why everything is so screwed up now, maybe more.

But its defenders are legion. Really depressing subject for me.

Brian Hayes said...

Perhaps lessons learned offsets a lousy mood, but not by much. Unless we begin to repair these errors.

Epicurean Dealmaker wrote out his view that we are coddling the undeserved. We can fix that.

Economic Undertow radically proposes that our silly economic orthodoxy is blinding us:

We've been lured toward consuming:

With too little to show for it, we're facing real challenges.

One thing I appreciate is Stagflationary Mark's relentless revelation of actual fact.

Stagflationary Mark said...


My life was much much more pleasant before I unfortunately learned of...

Probably explains why most cynics are older.

Idealist: a cynic in the making. - Irving Layton

Stagflationary Mark said...

Brian Hayes,

We've been lured toward consuming...

Washington's Lottery

* Daily jackpots.
* Big jackpots. Sweet odds.
* Ginormous jackpots.
* Instant gratification

Stagflationary Mark said...

Brian Hayes,

One more thought.

I am Keyser Soze

Well it’s time the truth was told.

Mr Slippery said...

OMG! Robots!

Canon camera production to go 'all robot'

Troy said...

"new divisions in growth fields"

luckily there's some rice fields pretty close to the Oita factory.

Stagflationary Mark said...

Mr Slippery & Troy,

The plants involved in the first phase of the move are located within Japan, but if the fully automated lines are successful, Canon will duplicate the move at three overseas facilities, the report said.

We may need to define successful. What's the American robot dream?

Robots raising a family, sending their offspring to college, and retiring on the beaches in Florida? Probably not.

Robots working tirelessly 24 hours a day only to be sold for scrap when even better robots appear? Absolutely!

Unknown said...

Rehab has already been completed turnkey rental, including new paint, flooring, kitchen cabinets, updated bathroom, and more rental properties .