Just an aside...Dollar General and Dollar Tree and the other dollar stores are reporting weak results.
Can't say, "Oh, that is because of rents," but given Erdmann's work on rising rents to income in lower-income zips...and the lack of new construction....after-rent incomes might be stressed in the dollar store crowd.
On the subject of rents, I'm still trying to figure out the RealPage situation. The Economist had a good synopsis, and I'm partly leaning towards supporting the government position. Collusion is collusion, but the larger problem is still scarcity. Large multi-family apartments tend to be higher quality than older units in 2 & 3 family dwellings, so they want to charge as much as they can and they have all bought into a software service that does that. In a constrained market every unit at every price point will be full and new units coming to market will probably drop the rent of low quality units before they create a price competition at the middle and high ends.
"This suggests that we are on a stable glide path with strong real growth that is sustainable."--KE
With all the soul-draining news out there, I will grasp onto this like a drowning man grabs onto flotsam.
The negative Norm in me says that in housing-constrained cities, the real wage growth will disappear into housing rents...and so is not so real.
BTW, I agree the Fed has been roughly right since C19 hit. And that hindsight is perfect. Being roughly right in real time is a solid success story.
I still wonder about the fact we live in a globalized economy, money is a fungible commodity, and there are other major global central banks following their monetary policies.
So...is monetary policy made globally in a multi-polar world?
And, unfortunately, the glide path to stable growth is before rent inflation and must come with a lot of financially stressed migration until we build more homes.
Interesting piece. I have a broader question about rental stats. What is the source that the Fed, Wall Street and the private equity groups use? I've been writing about South Florida real estate for 30 years and have never found a single, all encompassing source. In Miami, nothing is recorded with the government so there isn't a public source. The MLS only shows rents where commissions are offered. REITs don't typically pay a commission so aren't in the MLS, forcing rental stats to be collected by "surveying" leasing offices. We have way too many rental projects to survey in this market with any kind of frequency. I guess quarterly filings could be the solution but that seems less than efficient. Can you share any insight as I am skeptical of macro rental stats given my firsthand experience?
Good question. I use Zillow numbers, but I do think their rent numbers aren’t as dependable as their price numbers.
I think one thing that has held back real estate analysis is that we have never had great rent data. Imagine how bad stock market analysis would be if we could only guess at earnings.
Understood. I was hoping something had changed that I wasn't aware of. For what it is worth, there is a professor down here called Ken Johnson at Florida Atlantic University. He says Zillow info is at least 85 percent MLS, which would ultimately contribute to the problem of rental data.
Just an aside...Dollar General and Dollar Tree and the other dollar stores are reporting weak results.
Can't say, "Oh, that is because of rents," but given Erdmann's work on rising rents to income in lower-income zips...and the lack of new construction....after-rent incomes might be stressed in the dollar store crowd.
On the subject of rents, I'm still trying to figure out the RealPage situation. The Economist had a good synopsis, and I'm partly leaning towards supporting the government position. Collusion is collusion, but the larger problem is still scarcity. Large multi-family apartments tend to be higher quality than older units in 2 & 3 family dwellings, so they want to charge as much as they can and they have all bought into a software service that does that. In a constrained market every unit at every price point will be full and new units coming to market will probably drop the rent of low quality units before they create a price competition at the middle and high ends.
I’m not sure that collusion is collusion. If two farmers get together and decide they will ask for $4/bushel on their corn harvests is that collusion?
"This suggests that we are on a stable glide path with strong real growth that is sustainable."--KE
With all the soul-draining news out there, I will grasp onto this like a drowning man grabs onto flotsam.
The negative Norm in me says that in housing-constrained cities, the real wage growth will disappear into housing rents...and so is not so real.
BTW, I agree the Fed has been roughly right since C19 hit. And that hindsight is perfect. Being roughly right in real time is a solid success story.
I still wonder about the fact we live in a globalized economy, money is a fungible commodity, and there are other major global central banks following their monetary policies.
So...is monetary policy made globally in a multi-polar world?
Good question.
And, unfortunately, the glide path to stable growth is before rent inflation and must come with a lot of financially stressed migration until we build more homes.
Interesting piece. I have a broader question about rental stats. What is the source that the Fed, Wall Street and the private equity groups use? I've been writing about South Florida real estate for 30 years and have never found a single, all encompassing source. In Miami, nothing is recorded with the government so there isn't a public source. The MLS only shows rents where commissions are offered. REITs don't typically pay a commission so aren't in the MLS, forcing rental stats to be collected by "surveying" leasing offices. We have way too many rental projects to survey in this market with any kind of frequency. I guess quarterly filings could be the solution but that seems less than efficient. Can you share any insight as I am skeptical of macro rental stats given my firsthand experience?
Good question. I use Zillow numbers, but I do think their rent numbers aren’t as dependable as their price numbers.
I think one thing that has held back real estate analysis is that we have never had great rent data. Imagine how bad stock market analysis would be if we could only guess at earnings.
Understood. I was hoping something had changed that I wasn't aware of. For what it is worth, there is a professor down here called Ken Johnson at Florida Atlantic University. He says Zillow info is at least 85 percent MLS, which would ultimately contribute to the problem of rental data.