There’s a working paper that explains the differences between the different rent indexes and how they are calculated. There’s a decent amount of conflict about how to measure it is the summary with indexes like Zillow’s primarily tracking what it costs when you rent a new place vs the BLS stats more heavily weighing long term renters whose increases are often capped by local real estate regulations.
Guess who typically aren’t long term renters with far below market rates? Young people and poor people. You know, the people we’ve been saying aren’t being accurately measured by broad macroeconomic stats.
You should know that my side of this argument is an honestly pretty orthodox position among economists right now. There are significant problems with how we measure how the economy is doing and there are a lot of credible people criticizing it.
Interestingly now that a ton of new MDU’s are going online I expect rents to start falling in the near future. The current prices aren’t in any way sustainable without absolutely eye popping vacancy rates.
I won’t be surprised at all if the rent stays high and vacancy rates are high. A lot of those buildings are financed based on valuations that are based on high rents.
I don’t have an issue with the idea that the CPI is a single metric that is always going to be systemically wrong for certain types of people in certain economic environments.
I think my question is how strong of a statement is being made about the extent to which these metrics do not reflect reality. The government numbers say that the poor have something like 6% more purchasing power today than they did in 2020.
If you want to say that those numbers reflect something closer to a ceiling because of a different budget mix than CPI, or how rent inflation is measured with respect to long or short term leases, fine.
If you want to say that the poor have significantly less purchasing power than they did in 2020, then I think you need some rigor. If the position is the economic orthodoxy, then I assume there are some academic papers that can be cited.
The poor were at ~subsistence level before and they’re at ~subsistence level now. But the middle class has been squeezed hard, and I expect that trend to continue. So if we define middle class by actually quality of life and financial prospects, it’s a lot smaller.
We think the poorest likely have something close to exactly the purchasing power they had before. This is because there simply wasn’t anything left to take from them. There is a floor level of economic well being that you stop being able to show up to work consistently below and the bottom 40% or so were already living there when the pandemic happened.
They got bigger raises than the middle class precisely because you can’t get blood from a turnip and costs for them went up which meant pay had to go up by at least that much. When you’re one step from homelessness that’s just how it is.
Speaking of homelessness did that go up or down this last few years? One of the macroeconomic indicators I actually would have some faith in would be the total number of unhoused people there are on any given day. If that number is going up and you tell me the economy is doing great, yeah sorry does not compute. If more people are falling through the cracks than usual you can be sure other shit is falling up above somewhere. Oh and I say ‘would’ have some faith in because the data collection on homeless people is basically non existent. I wonder why they can’t find funding for that?
The truth is I don’t think knowing how things are going for the top 5% is even a very useful thing to know. It’s going great, obviously, they’re in the top 5%. Their needs are as entirely met as anyone in this whole multilevel marketing scheme of a country. This absolutely includes me, which is why you’ll never catch me bitching about money even in the worst trucking market I’ve ever seen… because I personally am doing just fine.
But down below is where the stakes are high and people are getting seriously hurt. And it’s most of the people. It matters that normal middle class family formation is massively down. I’m not some conservative fundamentalist weirdo, the birthrate is very dangerously low. People are eating less food, having fewer kids, and becoming homeless at a greater pace. Life expectancy is going down because deaths of despair and cancer are going up rapidly. Childcare is so expensive that it’s materially impacting the labor force participation rate. The public schools are getting worse, and the real wages of teachers have basically never been lower.
None of those things is compatible with a ‘good economy’. Inflation is a great metric for measuring how far rich people’s money goes. GDP is a great metric for how many yachts of wealth can be extracted from the total economy. CPI is a great metric for measuring how much additional pay you have to give your employees without having a revolt. The stock market is a great metric for measuring how many yachts of wealth can be extracted from large publicly traded companies now and in the future. The unemployment rate is a great metric for determining how picky you should be about candidates for job openings you have. These metrics all evolved from corporate management tools and they are at best tangentially related to the lived experience of the economy for the median family. They are terrible indicators of economic health.
When it comes to metrics perspective is extremely important as is the design purpose behind what you’re measuring. Politicians (and the corporate owned media) using metrics that primarily measure the well being of oligarchs shouldn’t be super shocking to anyone, but that is exactly what they are.
Yeah this is absolutely like level 0 of how you would start to unfuck the housing market cost wise. I think NYC is the place this likely happens first too, the situation there is actually criminal.
Yep, in a stroke of absolute genius we’ve set up a financial system where rent does not necessarily succumb to supply and demand and can remain artificially high EVEN TO THE POINT THE OWNER GENERATES LESS REVENUE AT THE SAME COST LEVEL!!!
Like literally we have property management companies CHOOSING to make less profit or even LOSE MONEY so that they don’t take down their property value (which newsflash is BULLSHIT) because it’s the collateral on their leveraged projects, and if everyone whistles past the grave they have a chance to keep all the balls in the air.
As Warren Buffett once said of leverage, “If you’re smart you don’t need it and if you’re dumb you shouldn’t be using it.”
A pretty simple concept that would probably take this down if we insulated it from corruption would be to force any property over a certain value that’s collateral on a loan to be appraised by an independent government-funded agency every year and marked to market. Then let the chips fall where they may.
This will get the bullshit out of the market and reduce some of the leverage. Then set up an agency that buys the distressed properties up if they don’t get bought at auction, operates them in a conservatorship, and then sells them back onto the market at fair value. If that can’t be done, they can be operated as government housing.
Oh you fucked up with all your leverage and now you lost everything? Oh well, we’ll buy your apartment building for 60 cents on the dollar, charge market rent, and sell it back to someone who’s not a dipshit. Better luck next time, asshole.
The government agency profits could then subsidize the ones that are operated at a loss as government housing.
This isn’t true. Rent is sensitive to supply and demand, we just artificially hold up supply and subsidize demand as a matter of policy, especially in blue states. When you do that, you get California, NY, etc.
One thing red states absolutely do better than blue is encourage construction of new housing, which is why states like Texas have pretty stable rental rates despite massive increases in population.
@commonWealth Have you looked at the transcript from Biden’s testimony? Turns out the description of Biden’s intellect from the republican operative was complete bullshit. The not knowing when his son died specifically, and more generally.
But according to an ABC News review of the transcript, it was Biden, not Hur, who first invoked his son’s death – and the president indeed struggled to recall the exact year it occurred.
…
Recalling that period in his life, Biden, according to the transcript, appeared to get confused about when Beau died, getting the date correct, but not the year.
Not sure who told you rent prices have been stable in Texas since the pandemic, but they absolutely haven’t been. The fact that they’re coming down a little now doesn’t materially matter when the average rent of an apartment in the crappiest part of Austin is 1600 bucks a month, which is up from 1100 before the pandemic.
Yes the rent prices are starting to come down now but that’s because the size of the increases were some of the largest in the country in percentage terms and you’re absolutely right that they built a ton of new apartments.
I literally lived in a building that was at least 25% vacant and asked for iirc a 38% rent increase. Mid 30s at least. That’s not supply and demand. That wasn’t an isolated thing, either.
Three things are true:
Hur is a partisan hack, he took stuff out of context and smeared him.
Biden is too old and has had memory issues in public, and had some smaller than Hur made it out to be, but not insignificant issues in the transcript.
Biden is on a higher level cognitively than Trump, and more importantly not trying to be dictator so we should vote for him in the general.
None of this even moderately supports the assertion that rent isn’t sensitive to supply and demand. I’m not surprised that a big blue city with little new building is having prices go up. Subsidize demand, complain about price increases is the entire building policy of NIMBYs that dominate blue cities. Rents aren’t going up because landlords are holding units vacant, that’s an argument I’ve only seen on TikTok
The memory issues simply aren’t there in the transcript. You got played.
Somebody slept through Econ 101. 25% vacancy means supply exceeds demand by a wide margin, thus prices should go down. A 38% rent increase is a massive move in the opposite direction.
They literally turned me down on no rent increase and chose to keep the unit vacant instead. I literally lived it and was posting about it here, researched the situation, found out why, posted more about it here.
I know you really want to dunk on me, but you should probably read the transcript first. Biden was off by several years on when his son died. He said around 2017 or 2018, Beau was either deployed or dying. He was deployed from 2008 through 2009 and was Delaware AG through his death in 2015. Biden also at first thought 2017 was a presidential election year. To someone who’s a lifelong politician, that’s a pretty big mistake IMO - because election years are all even and they get talked about a lot. He also wasn’t sure if he was VP in 2013, which was smack dab in the middle of his time as VP. That’s a pretty bad one, as well. This is all on top of a handful of public presser instances where he had memory issues.
Now do these things mean that his memory is so bad he can’t hold office? No, but it definitely means he has to lean on others for certain recall and stuff may take longer. Do they mean he has some memory issues? Yes. Probably less severe than the vast majority of people his age, but also obviously worse than the vast majority of people below 65.
Hur was a partisan hack who way overreached, and as a result of his overreaching, Dems were able to hit back effectively today (if anyone paid attention), but the reality from actually reading that section of the transcript is somewhere in between. Biden is an old man and his memory is not as good as it probably used to be. He struggles to put some more recent events in the right chronological timeframe. His recall of specifics about those events is fine, and he can remember specific month and day but not year.
I don’t think anyone was paying all that much attention when the Hur report came out. Anyone being anyone who might have been open to changing their vote come November.
I’m also just not faulting someone for fucking up a year during a deposition. I’ve had 20 year olds fuck up the year they were fucking born when testifying.
There were literally multiple apartment buildings within a few blocks of each other with high vacancy rates sitting on tons of empty units and not lowering rents. The issue here is that when supply is low relative to demand, rent always goes up. But when it’s the other way around, it doesn’t always go down. Especially in areas with high rates of new development by large property management companies using leverage, which happens to be pretty common in the places young professionals want/need to live.
As a result, there is much less price competition and rents in that local area don’t come down as much as they would if it were simply supply and demand driving pricing.
I was calling Hur a hack at the time, so it’s no surprise to me that he proved to be a hack. The initial report also proved to be damaging (here we are, the media still running with Biden memory stories even today in some cases). The transcript also shows he has memory issues, as do his public appearances at times. Trump’s are worse, but that’s a whole other thing.