Rising Rents

While the current inflationary surge is largely economy reopening related and thus temporary, there’s a caveat. Strong job growth, improving household formation, higher wages, and house prices that are booming, may stimulate rent inflation. After averaging 3.5%/year in the years prior to Covid-19, it steadily fell to 2% early this year but is now rising. With housing inflation comprising 18% of the Fed’s favorite inflation measure, I’m paying close attention.