Hi, Yves. Despite the very favorable CPI report, readers continued to complain about inflation in the weeks leading up to the data release. Some experts argue that this frustration and stress is due to consumers still feeling stressed about their budgets because past large price increases are still hurting and there is no rollback (made worse by the relatively modest hikes). But one commonly debated component of inflation calculations is the housing cost component. The following post echoes the idea that it doesn’t adequately reflect ongoing cost increases, especially those incurred by renters. It’s hard to reconcile landlords making a killing with renters not feeling as squeezed.
Ulf Richter also has a good article today. Behind the Scenes of CPI Inflation: Services CPI’s Surprising Outlier Dragged Down Everything ElseOne of the first items he discusses in his detailed breakdown is the housing component of the CPI: Rents for primary residences and owner-equivalent rents are both up at annualized rates of 4.8% and 5.3% month-over-month, which, while lower than the increases in 2022 and 2023, are not negligible.
Please note that the following post does not cover the entire rental market, but rather focuses on the actions of large landlords, but one cannot help but wonder to what extent smaller landlords operating under the umbrella of larger landlords are inflating rents.
By Julia Conley, Common Dreams staff writer. A common dream
The Biden administration on Wednesday came as monthly inflation fell to its lowest level in more than two years and moved toward the Federal Reserve’s target. Celebrated ‘Welcome development’
However, according to an analysis by Accountable.US: 100 million people American renters are not benefiting from what Biden called a “great American comeback” on housing costs, especially not the millions of people whose homes are owned by corporate landlords.
The government watchdog concluded that the six biggest corporate landlords generated a combined profit increase of nearly $300 million in the first quarter of 2024, with most of that gain coming from rent increases.
Across the U.S., rents have skyrocketed 31.4% since 2019 while wages have risen just 23%, meaning tenants need to earn around $80,000 a year to stay within the rent burden and avoid spending more than 30% of their income on rent.
The six companies included in Wednesday’s Accountable.US analysis have more in common than just rent hikes: They’re all facing lawsuits over their use of property management software company RealPage, which uses an algorithm to fix rents and charge roughly 16 million rental properties In the United States.
Among the six corporate landlords surveyed by Accountable.US, Camden Property Trust saw the biggest increase in net income, with net income increasing 97% to $85.8 million in the first quarter of this year. The company spent $50 million on share buybacks, which it said was made possible by “weighted average monthly rent” rising about 2% year-over-year.
“Large corporate landlords continue to raise rents for ordinary households, regardless of how much their profits increase.”
Essex Property Trust saw its net profit increase 76% year-over-year to more than $285 million as rents rose 2.1%, while Equity Residential saw its revenue grow 39% to $305 million as rents rose 3.4% with tenants paying an average of $3,077.
AvalonBay Communities’ net profit increased 18% to $173.6 million, likely due to a 5.6% increase in “rent and other income” and a 68.4% increase in “management, development and other fees” to tenants to nearly $1.8 million.
“Large corporate landlords continue to raise rents for ordinary families, no matter how much their profits grow. To make matters worse, many are doling out new bailouts to a few wealthy investors at the expense of struggling tenants,” said Liz Zelnick, director of Accountable.US’ Economic Security and Corporate Power program.
The group’s analysis comes just weeks after federal investigators raided the Atlanta-based property management company as part of a Department of Justice antitrust investigation into RealPage “an alleged nationwide conspiracy to artificially inflate apartment rents.”
As International Competition Policy Institute (CPI) report Earlier this month, a report said, “RealPage’s system, which provides rental price recommendations based on real-time data from landlords, is said to be a key tool for manipulating the rental market. The company’s influence extends to 70% of apartment complexes.”
“The scheme operates by encouraging landlords to adopt RealPage’s pricing recommendations, which they follow 80-90% of the time,” the report said. Consumer Price Index. “This coordinated approach results in fewer vacant rental properties and higher prices. One of the architects of RealPage’s system was quoted as saying that the aim is to prevent landlords from undervaluing properties and ensure consistently higher rents across the board.”
“It’s not surprising that some of the companies that needlessly inflated housing prices worked closely with software companies that have been accused of helping landlords manipulate prices on a massive scale,” Zelnick said. “Runaway rent increases, driven by greed not need, are holding back progress for too many Americans, which is why Congress must do more to support the Biden Administration’s housing affordability agenda.”
President Joe Biden Urged Congress is set to pass legislation to stop landlords from price gouging and create millions of affordable rental units.
