The Mystery Of The "Missing" Inflation Solved: Record Number Of US Renters Can't Afford Housing

Tyler Durden's picture

Looking at a long-term chart of the BLS' core CPI chart or the Fed's preferred inflation metric, the Core PCE, reveals that the US is patiently trudging below the Fed's goalseeked goal of roughly 2% inflation per year. Even when stripping out just the "shelter" component of CPI reveals inflation that is barely higher at just under a 3% annual increase.

 

Of course, by now everyone knows that the artificially suppressed, "hedonically-modified" and seasonally-adjusted inflationary readings is what has permitted the Fed to not only grow its balance sheet to $4.5 trillion but to keep rates at 0% for 8 years. Because "how will the economy recover if there is no broad inflation", the Keynesian brains in the ivory tower scream, demanding more, more, more easing just to push inflation higher.

There is only one problem with this: it is all a lie - just ask any average American whose cost of living has soared in the past decade.

Still, with reality diverging so massively from the government's official data, reality just had to be wrong somehow.

Turns out reality was right all along, as revealed by the latest "State of the Nation's Housing" report released by the Center for Housing Studies at Harvard, which showed that while inflation among most products and services may indeed be roughly as the Fed and BLS represent it, when it comes to rent - that most fundamental of staple costs - things have never been worse.

According to the report, for American renters 2013 marked another year with a record-high number of cost burdened households - those paying more than 30 percent of income for housing. In the United States, 20.7 million renter households (49.0 percent) were cost burdened in 2013.

It gets worse: a whopping 11.2 million, or more than a quarter of all renter households, had "severe cost burdens, paying more than half of income for housing." The median US renter household earned $32,700 in 2013 and spent $900 per month on housing costs. Renter housing costs are gross rents, which include contract rents and utilities.

From the report:

Over the span of just 10 years, the share of renters aged 25–34 with cost burdens (paying more than 30 percent of their incomes for housing) increased from 40 percent to 46 percent, while the share with severe burdens (paying more than 50 percent of income) rose from 19 percent to 23 percent. During roughly the same period, the share of renters aged 25–34 with student loan debt jumped from 30 percent in 2004 to 41 percent in 2013, with the average amount of debt up 50 percent, to $30,700.

In other words, the reason why American consumers are caught in a state of near-permanent spending depression is simple: almost half of all renters can barely afford to splurge as they are spending 30% of their income just to cover rent, a number which surges to more than half of all income for a quarter of all renting households, of which increasingly more are Millennials... Millennials whose balance sheet liabilites include over $1 trillion in student debt.

Of course, the reason for this dramatic surge in rents has been extensively documented on this website in the past: with housing affordability plunging and stringent credit standards (at least until the auto subprime bubble 2.0 shifts back into housing) and the national homeownership rate plunging back to 1993 levels for most...

 

... a number that is kept artificially inflated by the 65 and over age group.

 

... this has forced an unprecedented number of American households to seek shelter, no pun intended, in the relatively cheaper confines of a rental unit.

 

And we do mean relatively: on an absolute basis, asking rents across the US have never been higher:

 

So as more Americans are forced into a limited number of rental units, prices have exploded at a far greater pace than what is officially reported in th shelter or core CPI metric, for all - but especially for those in the lower income buckets: as seen in the lower right chart, the rental "cost burden" of households making under $30,000 is the higest ever, at well over 70%!

 

But nowhere is the mystery of the "missing" inflation more obvious than in the following interactive map showing that in virtually all major seaboard metro areas, including the major cities in California, New York, and Florida, the number of households with a cost burden is 50% or higher.

Click on the interactive map below to find just how much of their income households in your region pay just to have a roof above their heads.

So the next time someone, usually either a government bureaucrat or a reporter/drama major masquerading as an "economist" tells you there is no inflation, just show them this map and ask how much of their after tax income do they spend on rent.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Miffed Microbiologist's picture

What do you bet Obama in his next idiot speech proposes a fix...Rent Control! And the people will lap it up.

Damn,sometimes this stuff physically hurts.

Miffed

Dr. Engali's picture

I hope he does. Just another fucking nail in this coffin.

DaveyJones's picture

that's why whatever inflation is left goes into his ego

Four chan's picture

the only inflation the fed cares about is wage. we shipped out our wage inflation to the slave nations slaving for slave wages decades ago, and that inflation is never coming back. meanwhile the fed steals silently from savers through devaluation by printing. POINTING OUT PERFECTLY THE IDIOCRACY OF THE FEDS EFFORTS. 

IRC162's picture

signed in just to +1 you.

 

as always, it puts a smile on my face to see one of your posts.

BoredRoom's picture
BoredRoom (not verified) IRC162 Jun 24, 2015 4:03 PM

Bush's fault, since it occurred during the Obowelmovement......ever notice how everything bad was Bush's fault, and nothing is Obma's fault?   Funny how the chosenite media abandoned their "happened on his watch" " meme.

 

 

I bet that will come back with a new Republicon President

lasvegaspersona's picture

If we get the flavor of 'R' that we got here in Nevada I would not expect much improvement. In fact it get worse because the 'D' s are happy to push any tax increase they see, even if was the idea of an R.

NoDebt's picture

Rs and Ds want the same things.  They just quibble over who gets to hold the reins of power and a few minor details.  On any major issue they all agree it needs to be "fixed" and specifically, fixed by government with increased regulations and taxes.

Name the issue that Rs disagree with Ds:

A.  Immigration

B.  Healthcare

C.  Free Shit Army

D.  Free trade (free robbery) deals

E.  None of the above.    <---- Hint: this is the right answer

OC Sure's picture

 

 

 

The lie is that rising prices is inflation. 

The truth is that those who perpetuate this lie do far more to support the thieves that they claim to oppose rather than offer any meaningful remedy. 

The truth is that the increased volume of counterfeit introduced in to the existing currency pool steals from the existing value and this is the cause of rising prices; rising prices are caused by the inflation of counterfeit. 

The only mystery around here is why the above 3 sentences are mysterious. 

Charming Anarchist's picture

I do not think it matters but you are wrong. Your target in argumentation is off.  Neither you nor I nor anybody else on this planet are entitled to stable prices, let alone any price.  Get that straight. 

If your neighbor out-bids you in an auction, tough titties.  If your neighbor trolls you at an auction leading you to bid higher on a purchase, good for him.  If your neighbor owns/controls all of the surrounding territory leaving you land-locked and at the mercy of his tariff collectors, what are you going to do?  If a herd of roaming wild animals** approaches your hut, go complain about your increased rising costs incurred to guard your goats. 

<<...rising prices are caused by the inflation of counterfeit. >> 

Technically, rising prices are caused by increased demand --- plain and simple.  It does not even matter if it is counterfeit or legit money.  If more folks moved into town and started freely doing commerce in competing currencies along-side state fiat or engaged in more barter --- that includes pms which are just a sub-set within the vast rubric of barter --- you would see rising prices. 

The root of the problem is statism and taxation/threat is its weapon without which the counterfittingg would be none of your concern.  Good money will chase bad money out because folks want predictability in their money.  People can deal with price inflation but they can not deal with it forever when the numbers are hopelessly rigged against them. 

The newly printed money is essentially given for free to a select few who get to spend it 1st before it cycles through the economy.  The rise of prices happens because the select few either outbid the non-select few all of the time or clear the shelves.  Within the abstraction of time, the select few are finished shopping when you are just coming home from work --- you have to go shopping after-hours and weekends hoping something is left to buy.  You are always late in the bidding such that even if you had a well-spring of molten gold and silver flowing in your backyard, you would still face rising prices because you have to take the time/effort to bring your money to market. 

The printing and counter fitting of fiat essentially makes the accumulation of enforced wealth by club members no more exerting than a card game.  The chase for money is rigged.  Good money can never out-pace the bad because folks are compelled to use the bad and carrying more than 1 set of books is financially unfeasible.  If you are looking for mystery, ask why you can not pay your taxes in anything BUT state fiat.  Imagine if you could pay taxes in any currency of your choice. 

TheGreatRecovery's picture

CA, FWIW, it seems to me that you voiced the same thought OCSure did, but in different words.  I don't think OCSure is wrong, and I don't think you are wrong.

MontgomeryScott's picture

Yup. CA is in the 50%-plus range, I see.

I tried opening the hyperlink to the HAH-VAHD page, but all I got was a 'grey' map.

If you see a storm on the horizon, prepare. The ZH people have another way of saying this. 'Hedge Accordingly'.

MY PERSONAL situation is between 12 and 15% of income spent for lodging (in a state where the 'average' is 30-40%). 1,500 Sq. Ft, a pasture, outbuildings, water, food, and no 'ethnics' to speak of. It's too hot in the summer, and too cold in the winter, and there are no jobs here, and people have guns and Bibles and are kind and considerate of others (double-plus BAD). Of course, ALL situations are temporary. Pre-planning the place is quite a satisfaction (I've only been here for 26 years or so). Air-conditioned and well-heated and well-insulated and actually a very attractive place within 5 miles of stores and stuff... and a Rose garden and front and back yards and an oversized two-car garage... and a 30-foot flagpole in the front yard visible from the three bay windows... and a riding mower and all the accoutrements...

GUESS how much I pay per month, and win a 'prize'. YES, it's got an artesian well at about 180 feet, and malls within 10 miles of me, and REAL LEAD PAINT on the walls (and a new roof), and INDOOR PLUMBING, and no neighbors within 500 feet or so. I'll have to buy horses, I suppose, one day, for my 6-horse barn out back. NO, I'm NOT in Canada, or the 'Northeastern' states, or stuck in the 'rust belt', or 'the South', or 'Snowbird territory' (or fucking UTAH). This place was once known as 'God's Country'.

Do I pay MORE than two grand a month, or less?  Should I invest in a boat so I can go to the ten-mile-long lake that is less than a quarter-mile away (and have an 'unfortunate boating accident')? Should I purchase a private airplane so that I can fly out to the private runway and stay in the private cabin that I have been promised that I could use for life (and have an 'unfortunate aircraft accident)'?

It's all a matter of 'strategic planning'. When you are good and kind and honest in life, these things literally 'fall into your lap'. Do I pay MORE than, say, $500.00 per month, or LESS (for example), for 'lodging'? I chose the LATTER, 26 years or so ago. The house 'only' has 1,500 square feet or so. A couple of acres (give or take) of fertile, arable land and open space is, well, 'of little, practical, significance'.

Larry Silverstien's rent must be absolutely ASTRONOMICAL! The WTC complex is his 'WIFE' I suppose (especially 7WTC; AKA 'The Solomon Brothers Building'). 

i wonder how much Benjamin Shalom Bernanke's 'rent' is!

What's a 'FWIW'? A 'fucking wife in waiting'? You 'millenials' are SO smucking FART in your little cutesy 'abbreviations'!

Is that the noise a drone-operated Evergreen Aviation International-modified chemtrail tanker makes while circling Southern California; or the sound of s Bollywood 'starlet' sitting on the potty relieving her bowels, perhaps?

 

 

the kings whore's picture

What I would like is to live in a rent-free FEMA trailer village.  I also want government dental and healthcare.  Also, throw in some food stamps.  Now that's living.

Manthong's picture

Aw, c’mon.. look at the upside..

.. when the majority of the population cannot afford housing anymore, we will get David Rockefeller’s long anticipated insurrections and Eugenics solution.

Or.. maybe Thomas Jefferson’s anticipated solution.. I seem to recall something about a tree.

TheGreatRecovery's picture

:-)  GOOD!   My guess is, it's paid off, free and clear.  "A country boy will survive."  :-)

Jug Jugette's picture
Jug Jugette (not verified) Charming Anarchist Jun 25, 2015 1:01 AM

"Counter fitting"? is that the same as rendering or plastering?

SeattleBruce's picture

"Turns out reality was right all along" - go figure! That's kind of the definition of reality!

Vampyroteuthis infernalis's picture

As a deflationist, I call out most articles on inflation as overblown. This one is very true. Rents have skyrocketed as my wallet goes empty. Screw banksters.

MonetaryApostate's picture

I think you've got that all wrong, it's screw the poor bastards who can't afford to pay us everything they own....  Because the banks are just the accountants of the criminal oligarchy that writes the rules & prints the money...

Enjoy your tax cake.

Bay of Pigs's picture

Oh yeah? Try looking at food, electricity, cable, insurance, cars, ferries, airfares and especially college tuition.

Deflation my ass...only in the velocity of money.

Bro of the Sorrowful Figure's picture

what i wish my girlfriend was. she's currently inflating at a rapid pace.

TheGreatRecovery's picture

OH NO!  Wouldn't it be AWFUL if the television died, and you and she took to riding bicycles to the library to get books.  :-)

MontgomeryScott's picture

DAMNED GOOD QUESTION!

It depends upon which 'skool' the 'edumacated idiot' is referring to (in terms of his so-called 'understanding') in the usage of the word.

A TRUE 'deflationist' is a coat-tail riding 1920's 'higher-edumacated' cocksucker for the 'outliers' who sees an opportunity to make 'duckets' from the loss of the value of the fiat-denominated currency (in his nation) (in GRAPHIC TERMS).

Of COURSE, there are a myriad of OTHER definitions (the one who still thinks that 'Whip Infltion Now' buttons are 'cool'; and the one who thinks that the FEDRES's 'job' is to KEEP INFLATION 'in check'). Of course, using 'big, vague words' to enhance the peoples' thinking that they are somehow' edumacated'  (like 'DEFLATION'; or 'DEFLATIONIST', for example), give a false sense of credence to their claims (the CIA operative Jim Jones, for example, 'fully suicidal', told his congregation to TRUST HIM and drink the KOOL-AID... but 10-1 odds, 'Jim Jones' is still actually ALIVE).

 

OBVIOUSLY, you are not a TRUE 'deflationist', and if I make MY contribution I WILL get the BETTER SEAT!

DAMNED GOOD QUESTION! EXCELLENT!

https://www.youtube.com/watch?v=AKJfQN5CB5g

 

 

 

MontgomeryScott's picture

"As a deflationist,..."

As a REALIST, I can assure you that there is NO. REASONABLE, CAUSE, FOR ALARM.

Mr. Yellen is, as we speak, calling on Mr. Bernake to check out and ground-certify the OFFICIAL helicopters which will be used to deploy the 'money-bomb'. I'm sorry about your personal issue regarding 'deflation', but there are AMA board-certified doctors who are paid for by the Pharma corporation lobbyists who can proscribe pills for this malady (get used to the color 'BLUE', and the size 'LITTLE').

The 'interst rate announcement' was put off until SEPTEMBER.

A 'deflationist' is one who revels in popping little girls' balloons, and slashing car tires, I think. Are you 'pro' deflation, or 'anti-deflation'? Do the terms 'stagflation' and 'deflation' and 'inflation' and 'hyperinflation' and 'devaluation' have ANY common ground in your 'belief system'? Do you comprehend the usage of the term 'HEDONICS' as it relates to the CPI?

 

Again, my condolences for your 'deflation' problem. May the life-blood of your penis once again be enhanced by a woman who entices you.

 

 

TheGreatRecovery's picture

<  PLEASE let Bernanke touch the Arkenstone.

<  Heck with Bernanke.  He never had a great voice like Greenspan.  At least you paid him a salary, and he got way more than his 15 minutes of fame.  Let him go touch the Golden Calf on Wall Street if he wants.  Hah!  :-)

Stuck on Zero's picture

That rental inflation is not going to the landlords. Between insurance, tenants who damage rental units, government mandates, and Chinese made plumbing components that disintegrate and flood the place landlords are hurting.

Son of Loki's picture

My dad had a rental once but dumped it after one tenant did $18,000 worth of damage.

 

He didn't even break even after buy/sell costs, insurance, taxes, etc. Turned out to be one of the biggest headaches in his life and uber time consuming.

greenskeeper carl's picture

That right there is why I haven't bought. I'm only going to be in my location for a few years, and I'm terrified of the house being worth 25-50% less than I paid for it when I need to move and try to sell it, and I'm equally terrified of renting it to some low life that destroys the place. So, I rent, and save, and one day , hopefully, I'll be able to buy a decent place using little to no financing at all. The only thing that sucks is that yes, rents have gone up. If I had put 15% down on a house just like the one I am renting, the payments including taxes and insurance would be about 300 less a month than I am paying. It sucks, big time, but at least I don't wind up in a situation like you described, or stuck selling a house that's worth a lot less than I owe.

steveharless's picture

thats what property management is for...to handle situations like this.   its getting so dangerous to collect rent; land lords are being murdered when they go to collect the rent from desperate people

.

www.ViewLasVegasRealEstate.com

ghengis86's picture

Gone are the days of light contracts and easy land lording. Speaking from my own experience, you must have air-tight contracts (reviewed by local attorney), aware of all the "renters rights" laws in your town, county, state, must be meticulous in record keeping and communication with your leasee (I'm case you have to evict), can't let anything slide, no mercy if a lease covenant is broken, etc etc. it can be a giant pain in the ass. The key is screening your renters. If you get decent people, under a good contract with a solid property that isn't falling apart, you might make a little cash. If you try to do it as a hobby, you'll eventually get fucked.

Pro tip: put a throwaway clause in the contract about firearms and bring it up in your initial interview and see what they say. I got lucky enough to find a guy who built custom rigs for 3-gun shooting events. He was a multi-year renter and we got along marvelously.

cornflakesdisease's picture

Being a landlord is not for the faint of heart.

california chrome's picture

"landlords are hurting"

 

Who are those landlords that are hurting?  

 

Blackstone, Blackrock, Equity Residential, Avalon Bay, American Residential Properties, Inc., Realty Income Corporation, Essex Property Trust, Home Properties, Inc...?"

 

A tear is welling up in my eye.

/sarcasm

TheGreatRecovery's picture

Many people have saved for years and bought a second house to rent out to make income, instead of putting their money in the stock market.  Those people are small landlords.  I know some such people.  Some own 1 extra house.  Some own more.  It's sort of like, there are families who own a small family restaurant, and on the other hand there are mega-restaurant chains like McDonalds or Red Lobster or Yum Brands (or whatever the precise name is).

cornflakesdisease's picture

You obviously haven't lived in an apartment here in Houston.

CHX's picture

On the bright side, the trillions of dollars that are being and were exported (funded by decades of deficits) will find their way back home. Those will more than just likely be highly inflationary...

Fun Facts's picture

Donkey nation is getting used until it's used up.

Just like Greece.

Debt-Is-Not-Money's picture

"POINTING OUT PERFECTLY THE IDIOCRACY OF THE FEDS EFFORTS. "

Wrong- the Fed is on-point for their goals as they are a Criminal Syndicate stealing whatever we make over our working lifetimes. It's wrong if you kill someone outright but if done over decades it's ok especially if you're the Fed.

Four chan's picture

one day it may be called high treason.

steelhead23's picture

In my state (OR) renters are afforded a whole range of protections - just short of rent control.  With all the liabilities associated with being a landlord, were rent controls to be added in nobody would pony up the money to build apartments.  Hence, the long-term effect of rent control would be housing shortages.  So, if you encourage rent control, are you also encouraging your daughter to domicile in your basement?

Vendetta's picture

nope, not him... he's a corporate whore... inflating rents forces more into homes when they may otherwise not want to and his banker butt buddies want that.

813kml's picture

Surprised that ARMs aren't making a comeback, negative rate for first year with an escalator tied to price of steak.

MonetaryApostate's picture

I'm surprised the markets & banks are still open, I mean how long do they think this debt charade will last?

rbgnr111's picture

lol... and if he did... watch them all go from spending 40-50% in an apartment ... to no apartment and homeless because it's not profitable to rent anymore