MultiFamily Market Outlook - 09/28/2007 (Plain Text Version)

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In this issue:
New Vacancy Data Adds Local Information to the Mix
Starts Stronger than Expected
Rents Continue Rising Slowly in August
A Weak Economy, Getting Weaker Through Fourth Quarter
Multifamily Stocks Rebound Slightly

Rents Continue Rising Slowly in August

In August, the real rent index—which is based on the latest Consumer Price Index (CPI) data—continued to recover from the low point it hit in May. Although the August increase in the residential rent component of the CPI was the slowest since January of 2006 (2.3% on a seasonally adjusted annual basis), the overall CPI actually declined during the month (from 208.0 to 207.7).

Even after the decline, overall inflation through the first eight months of 2008 is running ahead of inflation during the equivalent period of 2007. A large part of the increase in the CPI through 2007, and the decline in August, can be attributed to prices for petroleum-based energy products. The August increase in the real rent index (which adjusts rent changes for overall inflation) was 0.3 points—108.9 to 109.2. At 109.2 the index is well above the 108.6 recorded in May, but still below the record of 109.5 that the index reached in early 2007.

Based on seasonally adjusted Consumer Price Indices; U.S. Department of Labor, Bureau of Labor Statistics. The annual rates indicate what the percentage change would be if the current monthly rate were sustained over a 12-month period. The real rent index is the CPI for rent of primary residence divided by the CPI for all items and scaled so that January 1995 is 100.