“Numerology” tries to find reality within various measurements of economic and real estate trends.
Buzz: I’m betting the landlord doesn’t want you to know that half of California renters told Census pollsters their rent didn’t go up in the past year. Nationwide, it was 48%.
Fuzzy math: But aren’t rents soaring? Well, many discussions about double-digit rent hikes come from surveys of what major landlords are seeking — so-called “asking rates” — for their empty units at large apartment complexes. This higher-end rental option is a modest niche. Small “mom and pop” investors own the biggest chunk of the nation’s rentals. Note: “renewal” rate hikes for existing tenants are typically smaller increases than those sought for vacant properties.
Source: My trusty spreadsheet’s review of Census surveys that in the pandemic era peek into broader aspects of American lives. The latest polling, from June 1 to 13, had a question about the size of rent checks.
When it comes to housing expenses, California is typically top (or bottom) of the list. So it’s a bit surprising the Golden State’s 50% share of tenants who didn’t suffer a rent hike was 25th highest among the states. Perhaps pandemic era’s pricing caps put on California landlords helped to limit rent hikes statewide.
West Virginia had the most “no hike” renters at 83%, followed by Hawaii at 74% and Mississippi at 66%. Florida had the fewest with a rent hike of 34%, followed by Arizona at 36% and South Carolina at 39%.
Compare that snapshot with a mashup of major “asking rent” surveys showing California ranked 17th with a 16% hike in the past year vs. 12% nationwide. Highs? Florida at 30%, New York at 23%, and Tennessee at 22% Lows? Kansas, down 1.3%, and Iowa, down 0.5%.
How it breaks down
Look at three groups of tenants who didn’t get a rent hike — folks with falling or flat rents and those who pay no rent at all.
Rent cuts: Yes, some tenants send smaller checks to the landlord. California ranked No. 41 for falling rent with 1.2% of its tenants spending less vs. 1.9% nationwide. Highs? Louisiana at 10.8%, Rhode Island at 6.2%, and Maine at 3.4% Lows? Montana at 0.4%, North Dakota at 0.4% and Washington state at 0.5%.
Flat rent: California ranked 20th with 44% of tenants having no change in their rent vs. 46% nationwide. Highs? Hawaii at 67% West Virginia at 62% Vermont at 59% Lows? Florida at 27% Utah at 31% Arizona at 32% South Carolina at 34%
No rent: Another not-as-small-as-you’d-think but a still noteworthy group — folks who say they’re living somewhere for free. California ranked No. 26 at 5% vs. 11% nationwide. Highs? Wyoming and West Virginia at 19% and New Mexico at 15%. Lows? Maryland, South Carolina, and Rhode Island at 2%.
And there’s a pattern. The states with the most tenants without rent hikes typically had smaller rent hikes from big landlords, on average 8.5% increases in a year vs. 15%.
I’m not saying rents aren’t rising rapidly. I know even modest hikes hurt when housing’s a typical household’s biggest expense.
The Bureau of Labor Statistics’ Consumer Price Index also tracks rents from surveys of renters. Its reports also show big rent hikes at major apartment complexes aren’t the full picture.
The CPI says U.S. city average rents rose 5.2% in the year ended in May — and remember, that’s measuring all renters in all sorts of living situations. It’s a shock to the wallet vs. the 1.8% increase of May 2021.
The CPI’s rent hikes vary widely among the 23 metro areas tracked nationwide.
Two fast-growth cities in states with few tenants without rent hikes topped the list. Phoenix had the biggest increase at 13.5% vs. 3.4% 12 months earlier. Tampa rents were up 11.9% vs. 4.9%.
Across California, the Inland Empire rents rose 8.1% vs. 1.8% in May 2021; San Diego was up 5.7% vs. 1.2%; and Los Angeles-Orange County was up 3.7% vs. 0.9%.
Rents in San Francisco, that’s suffered a population outflow, rose only 0.9% — the smallest among the 23 metros tracked.
Many apartment “experts” dismiss government data as poor quality research. Let me politely say, would you expect kind words for the competition?
But the industry’s headline-grabbing rent measurements aren’t reality. Those numbers reflect the big landlord’s narrow view of the market.
These institutional property owners often do business with a slice of the population who can “afford” to live in large rental properties — and frequently that’s the market’s higher-end product. And it’s no secret that a significant chunk of residents in big complexes are wealthier folks that have been well-treated, financially speaking, by the pandemic’s economic rebound.
Plus, big landlords can more easily digest vacancies than small-fry competitors. They can use that advantage to be patient and get higher rate hikes from new customers.
I’m not ignoring the year’s noteworthy upswing in rents and its hit to a tenant’s checkbook. Yet knowing there are smaller increases suggested by government surveys can empower a renter’s bargaining position.
Nor does the reality of more modest overall rent increases help the industry’s image with its investors and bankers.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]