While there has been a deserved large focus on commodity prices and its impact on consumer price inflation, another factor for the CPI is about to turn upward too. That is the housing component. Owners Equivalent Rent makes up 24% of headline CPI and about 40% of core CPI. Using the comments from the two largest apartment REITs as anecdotal evidence, rents are moving higher. Equity Residential said base rents for new rentals will rise by 5% and rent renewals will be up 4-5% in 2011. Avalon Bay’s conference call doesn’t start until this afternoon so I don’t have their rental outlook for 2011 but they said Q4 rental rates were up 2.9%. To compare to recent rental trends in the CPI, OER in the Dec CPI report saw a gain of just .3% y/o/y.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.