Yesterday we explained why it increasingly looks like the US is finally going to get some inflation after a long stretch of weak pricing growth and disinflation.
Excess capacity or “slack” in the labour market and the industrial system is diminishing as the economy kicks into higher gear, and this looks likely to lead to higher prices (shortages = price increases).
Now here’s another big area to watch, from the real estate world.
The apartment market just had its best quarter since 2001.
Effective rent growth was 2.4% on a quarterly basis nationwide in April-June 2014, the highest quarter-to-quarter rate since the 2.9% of July-September 2000. Occupancy in the second quarter of 2014 was 95.0%, the strongest since the 95.6% of January-March 2001.
Both rent growth and occupancy exceeded expectations.
Effective rent growth was soft in January and February, perhaps because of the major winter storms and bitter cold temperatures that gripped much of the nation during the early part of this year. But March, April and May was one of the strongest three-month stretches we’ve seen in the 19 years Axiometrics has been tracking apartments.
Here’s the chart showing rising occupancy rates and surging rent prices.