“The survey says” examines various rankings and dashboards judging geographic locations while noting that these ratings are best viewed as a mixture of astute interpretation and data.
Buzz: The federal government’s leading cost-of-living measure indicates renters in California and across the country are seeing increases in rent inflation not seen in decades.
Source: My trusty spreadsheet analyzed the long history of the “primary residence rent” bracket of the inflation-tracking Consumer Price Index for three major California metropolitan areas and the key metric? How fast rent inflation has changed in a year – or looking at the increase in the increase.
The CPI’s long track record for rents allows us to put rising housing spending in a long-term perspective.
Consider that in the first four months of 2022, the one-year jump in nationwide rent inflation was the largest since 1948.
In California, San Diego’s rent spike was last bigger in 1968. And Los Angeles and Orange counties haven’t seen rent spikes like early 2022 since 1980.
And the latest rent increases in the San Francisco metro area were historically unremarkable, except that they marked the first time rent increases rose after five years of declining increases.
In Los Angeles and Orange counties, the CPI indicates that the cost of renting in the first four months of 2022 increased 3.43% year on year. In 2021, rental inflation was 1.24%.
This 2.2% increase in what tenants pay – if it continues for the rest of the year – would be the biggest increase in 42 years.
Nationally, consumers are paying 4.3% more for rent this year, up 2.07 percentage points from last year’s 2.23% increase.
In San Diego, consumers are paying 5.1% more for their rent this year, a rapid 2.9 percentage point increase from the pace of rent inflation last year.
Then there’s San Francisco, where rent increases have contracted as many residents chose to live elsewhere before and during the pandemic.
At the start of 2022, the CPI indicates that consumers in the Bay Area are paying only 0.33% more for rent. Rents rose at a rate of 0.1% in 2021 – the fifth annual decline from rent inflation of 6.8% in 2016.
At the end of the line
These are major blows to consumer wallets caused, in part, by what we’ve seen across the economy: “Too much good stuff.”
The finances of many tenants continued to improve this year as the surprisingly robust recovery of the pandemic economy allowed more people to afford to get out of crowded situations and/or pay for an apartment.
Remember that the CPI Rent Index is a slow measure reflecting what a broad consumer base pays landlords in all sorts of living conditions. These jumps in rent inflation strongly suggest that housing costs will be an even bigger financial headache for many people – if not the economy as a whole – for the foreseeable future.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be contacted at [email protected]