Why this Won’t Work out: Rampant Rent Inflation Collides with Stagnant Incomes

Unlike stocks, a housing bubble can only go so far.

After a wait of 417 calendar days, or 286 trading days, the S&P 500 finally set a new record high on light volume. Bonds have soared, and yields have dropped to ludicrous lows. The 10-year Treasury yield hit an all-time low on Friday of 1.366%. Globally, nearly $13 trillion, or 29% of total bonds outstanding, are trading with a negative yield. So those asset bubbles remain intact.

Commercial real estate has been soaring since March 2009, and that bubble remains intact, though some markets are already causing fear and trembling due to office-space gluts that are now coinciding with withering demand, such as in Houston and in San Francisco. Home prices too have been soaring for years, though in some major cities, the tide has turned.

Rents have been rising in parallel. It’s in real estate where an asset bubble becomes a real-life issue for people who don’t even own any assets – they’re paying the price for the bubble.

Other asset bubbles abound. Central banks have accomplished a lot. Blowing so many bubbles to such an extent for so long has been an astounding feat. In total, central banks created $24.6 trillion, according to BofA Merrill Lynch estimates. When they bought financial assets with that new moolah, they put $24.6 trillion of cash into the hands of investors and speculators concentrated in the major financial centers of the world.

Yet the global economy remains languid. Demand is sluggish. Job growth in the US can barely keep up with population growth. And a good part of American consumers – those on fixed incomes and savers – have seen their incomes transferred to others. So they’ve gutted their consumption.

But economic reality doesn’t matter to stocks and bonds. No one has to live in them. Economic reality matters to housing, however: the market needs to have enough people who can afford to pay the mortgage or rent. So the housing bubble is subject to another force: the reality of incomes. And those incomes have been a dreary sight for the past 16 years.

The median annual household income in May, not adjusted for inflation, fell 0.7% to $56,853, the second month in a row of declines, but was still up 2.9% from a year ago, according to Sentier Research, which uses Census data as base for its monthly updates. Adjusted for inflation, “real income” fell 0.9% for the month and rose 1.8% year over year, but remains 1.5% below where it had been in January 2000.

This chart by Doug Short at Advisor Perspectives shows the changes in nominal (red) vs. real (blue) median household incomes from January 2000. Note the sudden downturn:


In the press release, Sentier Research’s Gordon Green put the current decline in income this way:

“A cause of concern is what happens to inflation, which showed an uptick of 0.2% between April and May, driven by rising fuel prices. We are now at a point where the May 2016 median is 0.3% lower than the median of $57,024 in December 2007, the beginning month of the recession that occurred more than eight years ago, and 1.5% lower than the median of $57,701 in January 2000, the beginning of this statistical series.”

Kudos, central banks!

But there is a fly in the ointment: when incomes stagnate as housing costs soar, and as people can’t pay those soaring rents, something has to give. And that’s already happening in some cities, such as San Francisco. But mostly, rents are still soaring, though maybe not quite enough….

Year-over-year rent inflation in June, nationwide, was down to 3.5% from over 5.2% in June last year, laments Axiometrics, an apartment data services provider. During the glory days of 2014 and 2015, rent inflation ran over 5%. “But the sky isn’t falling,” it said. “The extremely high levels of 2014 and most of 2015 were not sustainable.”

Year-to-date in June, rent inflation amounted to 3.8%, below the post-recession June average of 4.0%, and down from 4.5% over the same period in 2014 and 4.7% in 2015.

This chart shows the 17 metros among the Axio Top 50 metros (based on number of apartment units) with the highest annual effective rent inflation. Note how rent inflation declined for 13 of those metros from the obscene levels in June 2015 (black bars) to the slightly less obscene levels of June 2016 (red bars). And Portland? Oops…


Sacramento, CA, leads the pack with 10.9% year-over-year rent inflation in June. But Oakland, “which spent more than a year at No. 1 in 2014 and 2015,” well, it “fell off the table.” In San Francisco, soaring rents led to the “Housing Crisis,” but a phenomenal construction boom has led to a condo and apartment glut. Rents are now stagnating, with a year-over-year increase in June of 0.5%. And it’s off the table. Another Bay Area hot spot, San Jose saw rent inflation drop to 1.0%, its “lowest rent growth since April 2010.”

According to Axiometrics, “all three Bay Area metros” – Oakland, San Francisco, and San Jose – “were among the five largest decreases.” Mercifully, Houston is not on the list either. Rents actually fell 2.1% in June from a year ago, as the oil bust drags on while apartment “oversupply is still an issue.”

Booming rents and cheap money over the years triggered and then nurtured a construction boom nationwide. But incomes have stagnated. And that reality is beginning to raise its ugly head.

Just when there’s a condo glut building up in the teetering housing markets of San Francisco, Manhattan, and Miami, with sales and prices already dropping, and with everyone in the industry praying for foreign investors to bail out those markets, these foreign investors are suddenly pulling back – for the first time since the Financial Crisis. Read…   Is this What Hit Housing in San Francisco, Manhattan, and Miami? Suddenly, Foreign Investors Pull Back…

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  64 comments for “Why this Won’t Work out: Rampant Rent Inflation Collides with Stagnant Incomes

  1. David Calder says:

    100 holes in the ground in Seattle waiting for construction cranes but where are they going to find all of these renters?

    • Mark says:

      Ive seen a few DCLU NOTICE OF LAND USE PLANNING signs sitting up and starting to rot. I dont get why on some they use huge 8×10′ plywood notices, while others have a 2×4′ plastic yellow ones on wire.
      Capitol Hill, with all its charmed anhalt storefronts, apt buildings, cottages and grand homes is being massacred, thanks to our “progressive” mayor, as large sections are being torn down for a lot of these punched-out-of -beer-can condos

    • NotSoSure says:

      One 9.0 earthquake, and you’ll find plenty of renters.

      • Pakilolo says:

        Your glib remark is not funny it’s pathetic. Laughing at maybe hundreds of thousands of people suffering is not a personality trait I would want to possess.

        • Petunia says:

          He’s right. Preparing for disaster in a disaster prone area is prudent.

          When Katrina hit New Orleans all the other surrounding cities got inundated with people looking for housing. They went to Baton Rouge, Houston, and beyond and they never went back home.

        • Bookdoc says:

          Yeah, but they’re Californians-I could care less. They CHOSE to live there!

        • interesting says:

          nobody cared about the suffering me and my family has been going thru since my entire industry was gutted and shipped to China. As a matter of fact i was told that this was “good for America” that tens of thousands of people lost their careers.

          all to save a nickle a part.

          and the “experts” wonder why there is no demand……DUH!! this isn’t rocket science, it’s simple math.

      • Mabel Syrup says:

        Yeah, think of all the new prime waterfront property that will be available :-)

      • nhz says:

        besides, you have also earthquakes of the more social kind, like the one that is organized in Europe by the US (spreading death and destruction all over the middle East and Asia), Soros and Mama Merkel.

        Over a million extra renters with unlimited spending power within a year, and just imagine what other tricks the politicians and central banksters may have up their sleeve to keep this bubble growing.

      • The general says:

        Expect it in sept.-October. 2017. Maybe with a pole shift.

      • Intosh says:

        With all the shale drilling, the odds this happens might have increased.

      • TheBloomIsOffTheRose says:

        A 9.0 magnitude earthquake from the Cascadia subduction zone would also generate an enormous tsunami as the subduction zone lies underwater off the coast. The combination would kill and maim plenty of would be “renters”. The area of extreme damage would extend from British Columbia through Washington and Oregon into part of California.
        Think too of many months of impassible roads, highways, bridges, and ruined water and sewage treatment plants, gas pipelines and other crucial infrastructure.
        An incomparably devastating event.

  2. nhz says:

    these bubbles can continue for much longer than anyone imagines …

    In my country 90% of the rental market is ‘social housing’ which used to be heavily subsidized for almost everyone (people used to stick to these homes even if their incomes increased, because the rents were cheap). Over the last 10-15 years subsidies for those with median income or higher have been gradually removed, which caused huge cost increases for these renters. Still the rents are far way below those in the tiny sector of the market that is ‘free’ (not under any government control). In the ‘free’ market, the rent has to cover the cost to the investor plus some profit, and unlike housing corporations and home owners, RE investors are not heavily subsidized by the government.

    In addition the free rental market is under heavy pressure due to the influx of a legion of migrants, who are all entitled to free homes (which means that the government will often pay far above market value to instantly provide all these migrants with their home entitlement – many of them get homes that are far above average, sometimes even multi-million euro mansions …).

    At the same time, monthly costs for many (private) homeowners are lower than ever because even in the big cities the yearly price increases of 10-20% are easily compensated by the unprecedented drop in mortgage rates (below 1% now). With no downpayment required, and because most mortgages only start paying down part of the principal after some years, many new homeowners are paying 2-4x less per month than renters with a similar home. So ‘there is no alternative to buying’.

    Of course – just like in the US – the huge rent increases are not reflected in the bogus inflation statistics (officially inflation in my country is around zero) thanks to the concept of ‘equivalent rent’.

    Of course somebody has to bear the costs of this homeowner bonanza at some point in the future, but most buyers assume it won’t be them – that either they will be bailed out by inflation, or the government will come to the rescue because they are a voter majority (even more so if you include the huge number of heavily subsidized social housing renters). For the majority things are looking great in the housing market :-(

    I bet that when the US moves to NIRP/ZIRP, home prices AND rents can move even higher just like in Europe …

    • nick kelly says:

      It’s impossible to examine your allegation that ‘legions of migrants’ get free above average housing, even ‘multi- million euro mansions’ without knowing where you live.
      With that info we can take a look.

      BTW: I post under my name

      • nhz says:

        I live in Netherlands. In my own city many migrants first get to live in a migrant center (relatively small space per person, but all brand new and with all the facilities they want plus free phones/bikes/clothing etc. etc.

        After getting official status they receive a free home and an allowance that is similar to what someone on social security would get, plus they are allowed to have their ‘direct’ family members relocate to the Netherlands and also get the same facilities. With the permanent status in my city many of them get to live in monumental buildings in the city center – homes that are too expensive for the average citizen. Even single under-18 youngsters from Africa get a complete home with 3-4 bedrooms, which is normally only available for families. All paid for by the taxpayer.

        Multi-million euro mansions are not common over here, but in e.g. The Hague some of them are used as migrant homes (one family or a few families per mansion). Some of these are government owned buildings e.g. former embassy buildings.

        The official position is that these expensive homes are ‘readily available’ for purchase or renting by the government. And officially all those freebies are only ‘temporary’ which means for 5 years after which their status is judged again. But in reality, almost nobody ever returns to where they came from and why would they, free everything for life …

        Waiting list for native citizens for social housing are many years, but every migrant is entitled to a home within 3 months of arrival. It’s an idiot policy and bound to produce HUGE problems down the road.

        • r cohn says:

          Why in the world do the citizens of your country put up with these government and Eurozone policies that result in such absurdities.

        • Jack says:

          cohn, Canada’s almost there now with similar socialist policies as Netherlands. The US is just one election away. There’s something dazed and confused about people in the so-called “first-world” countries that do this.

        • Mary says:

          This comment sounded to me like the xenophobic hate mongering that fueled Brexit. So I just did a search on “housing for immigrants in the Netherlands.”

          What I found were numerous articles about recent immigrants being housed in former prisons. (Apparently the crime rate in the Netherlands is dropping.) Nary a word about undeserving refugees living in luxury.

        • Jack says:

          Mary, even thirty-eight years ago when I lived there in the summer on a student fellowship, I saw and heard the grumblings of the locals in Netherlands about this. An Internet search is not a substitute for being there.

        • d'Cynic says:

          It’s the need to climb up the progressive ladder, that drives these insanities.

        • nhx says:

          @ Mary:

          you are totally misinformed, probably you are reading the wrong media.

          Yes, one former prison is used for TEMPORARY housing of migrants, the ones who still don’t have official status (those are not the ones I was talking about). Some decide to stay there even after they are entitled to a normal home because they like it very much there. The prison accommodation is small, but there are lots of extra facilities and of course it is no longer a real prison, they can come and go as they like.

          it’s sad how people who have no idea what they are talking about keep spreading the misleading migrant nonsense like the MSM is doing all over the world.

          I can assure you that many citizens are EXTREMELY angry at the authorities because all those migrants have preferential status over normal citizens (and most of the migrants are not ‘victims’ at all, more ‘locusts’ from Africa etc. who come here for free everything, including free girls, free booze and unlimited fun without any responsibilities)

        • nhz says:

          @ Jack:

          In the past we mostly had ‘political refugees’ in the Netherlands, who were offered a place to stay with local families who paid for this themselves. There were NO entitlements, except that they got to be an official Dutch citizen (with all the extras that go with it) if they could not go back to their country after several years, as happened for e.g. people from the dictatorships in Chili and Argentina. The only thing the authorities did then was organize things a bit and offer official refugee status, and some financial help if required. Those refugees where usually well educated, often from the ‘elite’, and accustomed to the Western lifestyle. They probably got some preferential treatment here anyway which some locals didn’t like but that was about it.

          I don’t know exactly when this policy changed, probably 30-40 years ago. Nowadays over 90% of the migrants that apply are economical refugees, who come here because the Netherlands (together with Sweden and Germany) offers the most luxurious facilities for migrants. Most of them have very little chance to ever get a job on their own, if they want to work at all (of course government creates some jobs for them, where they displace natives with lower education) and a majority has a lifestyle that is completely at odds with the locals,

          Netherlands has been an immigration country for over five centuries, and in general that worked out well despite some temporary problems. However, most of those past migrants were willing to work and adapt to the new culture, and didn’t have endless entitlements. Many of them were also relatively well educated and in some periods quite wealthy compared to the average Dutchmen.

          It’s also sad how nowadays especially Christian politicians accept young boys from e.g. Somalia as refugees because they don’t want to do military service. And of course they too can bring their whole family here after they have gotten refugee status. These are the same Christian politicians who until 20 years ago or so heavily punished Dutch boys who had moral reservations against military service; they often got 2 years prison sentence with extremely hard conditions. Looks like a ridiculous case of ‘positive discrimination’ to me. But no word about it in the MSM.

        • Intosh says:


          “I lived there in the summer on a student fellowship”

          Was that you benefiting from a socialist program?

        • Jack says:


          No, I was a research assistant to a Ph. D. candidate, where I paid my own way over there and back (from Canada), received a small stipend for the work I did at this Nato-supported institute and basically paid my rent with that stipend.

          It was a great opportunity for an engineering undergrad. I applied for the position and got it based on my own merits. I would’ve gone even if they didn’t offer the stipend.

          Margaret was right when she said (I’m paraphrasing) “problem with socialism is you eventually run out of other peoples’ money.”

        • Intosh says:


          Is that why the world is neck deep in debt? It’s ruled by socialism?

          The problem with people against any degree of socialism is that they fail to realize they benefited from it too.

        • Cienfuegos says:

          Wow…simply untenable policy long-term…I guess resettlement advocates envision a Netherlands where people from the corners of the earth can gather together as a multicultural host to sing Kumbya. (at taxpayer expense, of course)

        • Jack says:


          You asked why “the world is neck deep in debt?”

          Governments have been printing paper money and saddling the future generation with the debt.

          Here in our province of Ontario in Canada, we have a C$11.2 billion per year interest obligation (for 2015-16, http://www.ofina.on.ca/borrowing_debt/debt.htm) on our accumulated provincial debt alone! Population of 13.8 million, most of which are employed by the prov. gov’t.

          Wealth has to be created in our way of life in the west. We’ve been living in a very well-run pyramid scheme for the last number of years. Good luck when it crashes.

  3. Ehawk says:

    It’s pretty shocking… grown men and couples sharing an apartment with others. This is crappy standard of living for SFbay area. I know of families of 4 or 5 living in a 1bd apt.

    professional people over 30 sharing housing… because even when you make 120K and take home ~ 6K… you don’t want to pay 3-3.5K for an apt so you share and pay 1.5K… no fun when people are in their 30s or 40s.

    So far all I see is full employment in silicon valley tons of supply for tech, sales, Devs, and obscene amounts of money thrown to some people. Sadly the people being laid off are the old people over 50… only the top of cream survive for the old. Young people are not lacking jobs, these are the ones in the rentals… older people got mortgages.

    I like your analysis… but can you see this housing bubble bust without major layoffs?

    • Wolf Richter says:

      Watch the supply of new housing units. They’re coming on the market by the thousands every year. Most of them are high-end. Developers are going to make deals to get people to rent/buy. And this puts pressure on the lower end units. Already happening.

      Employment growth in SF has already turned the corner. (Though there have been no huge mass layoffs, there have been plenty of small ones).


      • HF says:

        Wolf, great article I’m a regular reader but first time poster. I’m in Houston here and I see exactly what you laid out in your real estate analysis posts. I’m a finance professional and it’s fun for me to analyze markets so I closely follow the residential market. I’m seeing inventory surging in Houston with prices flat to down. I have been comparing it with the previous crash in 2009 and I’m actually seeing inventory going up YOY much faster than the previous crash. It should be noted that Houston wasn’t hit that hard by the last housing crash but it was hit. However, Houston definitely took part in this last real estate bubble and is starting to feel the pain now. Even though the oil crash started in 2014 it took almost a year for that to register in the real estate market. I see single family months inventory % change YOY up double digits each month for the last 12 months, with some months the changes are 20 to 30 percent. Active listings are up double digits YOY each month for the last 12 months as well. Along the lines of what you noted about high-end, the 500k plus market has seen sales decline each month for the last 10 months, ranging from -6% to -22% YOY. Average price have been flat to down over the last 10 months. Houston has some condos but not like Miami. Condo sales have decreased most months YOY for the last 11 months.

        I’ve noticed there is a big disconnect between sellers expectations and buyers willingness to pay the high prices. Sellers are listing houses initially high and the property just sits there for months or years and they are having to aggressively reduce prices to sell. A lot of houses just sit on the market and the old inventory isn’t rolling off as new inventory is being added to the market. I’ve also noticed a lot of sellers will list high, make some price reductions, then take the property off the market and re-list it with another agent but list the property still very high. Seller expectations are not matching up with the market.

        The rental market here is huge with more than enough rental inventory. There are apartment complexes going up everywhere. These projects were started years ago before the oil crash, so I guess they figured they are already in the middle of the project we might as well finish it. I’m assuming a lot of these apartments are in REITs so these REITs will be taking a hit soon enough as there is no one to rent these apartments. Also, these apartments are usually “higher-end” and I’m guessing they would have liked to get higher rents from the units given the upgrades they are putting in. But again, the Houston economy has been hit hard by the oil slump and there is no longer an influx of people coming here for jobs. Most of what I hear on the street is about people leaving to head back to where they came from. Anyone foreign is mostly being sent back home due to lost job or “go back home or you will have no job”.

        • Wolf Richter says:

          Thanks for the detailed observations. About a year ago, a friend of mine and a reader/commenter here put his house on the market in Houston and sold it in one day. I guess those times are gone.

    • r cohn says:

      As I mentioned previously my daughter lives and works in Berkeley.She pays 2150/month for a 1 bedroom apt in a safe area.Obviously rents in San Francisco itself are considerably higher

    • Vespa P200E says:

      I just sold my house in SF east bay city where some people shamelessly display the license plate with the city name on it. Bought in Sept 2011 by sheer luck due to job relocation from another new bubble city Seattle area.

      Anecdotally rent appears to be softening a bit as been looking for rentals at a more affordable neighboring city since mid May. We expected less rental inventory and higher rent in July before school starts in Aug but noticed the opposite. Rental a block from the house we sold has been sitting empty for 1 month (asking $5k for 3100 sq ft). We are moving to much smaller rental.

      As for house sales and price – surprisingly the inventory has not moved in last 3 weeks after hot spring with houses going pending in few days. No more mainland Chinese cash buyers due to difficulty in moving money and RMB depreciation. Buyers for my house along with other houses sold in the last couple of months are Indians (based on Nextdoor).

      • d'Cynic says:

        Congratulation to winning the central banking lottery. I have a few friends and colleagues. Some have sunk their money into the crazy housing market (because you live only once), and benefited from it like kings or queens. Those that I consider cautious and prudent saved for their retirement home, and are screwed forever.
        I sense, even the winners in this lottery are anxious because they sense the prize is ephemeral.

    • EVENT HORIZON says:

      Just get the couples all about the same age….and watch how much fun they can have in the apartment. Don’t fight it. Enjoy it.

  4. Chuck says:

    Average wage is important in this matter, not median. http://bit.ly/1YrFcO4

    • Wolf Richter says:

      Nonsense. “Average” is skewed by the very few, big earners, including Bill Gates, Warren Buffett, and CEOs. That’s precisely why median household incomes are used – to lower the impact on the stats of a few extremely high-earning households.

      You know that math: 10 people walk into a Starbucks. 9 are hourly workers making $10 an hour ($20,800 a year). One of them is a hedge fund manager making $500 million a year.

      Their “average” income: $50.02 million. Conclusion: everyone at the Starbucks is rich and has benefited from asset bubbles.

      Average income in this case is totally useless and misleading.

      • JD says:

        exactly wolf. I used to write software for analysis of manufacturing parameter data and know that statistics CAN and will be used to hide the truth if there is a will to do so. I had no reason to manipulate the data as eventually the process would go out of control and the production line would have to be shutdown till it was corrected so I processed all the data though my computer and had to set to run in batch mode overnight otherwise the computer was unusable during my day shift. Outlier data points and other data points that fell far from the bell curve were to be thrown out as they usually reflected some tweaking of a process (semiconductor etching/deposition rates/times) during the normal production runs for maintenance or other routine activities.
        Currently the parking lot in the apt complex here in Seattle is filled with cars costing $50k plus (easy credit for a ‘Denali’) but the apts are shit and maintenance horrible but are somewhat cheaper (~1400/mth) than others in our office renting at $2200 to $2400 a month that are decent except for price. “Average” wages are higher because voila we work ridiculous hours so that is never captured in the published stats on wages … took 3 days of ‘vacation’ over a holiday weekend and actually logged 2.75 hrs of vacation time so a 40 hr work week is ‘considered’ vacation .. another example of pure BS. Homes in my neighborhood out in the boonies (too far to commute given work demands that span all hours of the day/night) are now going for $450k … I bought my place for $126k 10 years ago. A place I had bought in 2001 in Oregon for $169k (had to get rid of it after dot com implosion and wave of layoffs) was back on the market for $740k and ‘valued’ at $512k … so 250% or greater price inflation is apparently considered “Normal” as if my wages at the time ~100k should have currently ‘normalized’ at $250k/annually as an ‘average’ or ‘median’ wage… all BS.

      • Kokuanani says:

        Wolf, don’t include Buffett in your list of those with high salaries. He’s always kept his quite low. His wealth comes from the value of his vast holdings of Berkshire Hathaway. Actually he lives quite modestly in Omaha NE.

        • Wolf Richter says:

          The data in the article isn’t about “salary.” It’s about “household income,” which includes the billions people make off other sources. It also includes multiple earners in a household.

          Granted, in the example in my comment, I could have been clearer, specifying that this hourly wage is the sole household income, but I tried to keep it simple to demonstrate the principle of average v. median.

    • Intosh says:

      Math 101 newbie mistake there.

  5. Copernicus says:

    The link, if any, between rents and house prices is flexible to say the least. In Australia the yield is one percent in many places and mortgage six. In China they don’t even bother with renting. In Japan the rent is often above five percent an the mortgage is 0.7%

  6. wholy1 says:

    Just another part of the “rentORS” consolidation and xfer of wealth. Even Bernanke/Kuroda/Draghi helicopter “currency” – NOT “money” will resolve the inherent “con” – issuing increasing amts of FIAT CURRENCY in to the financial system thru BORROWER AUTHORIZED LOANS WITHOUT FUNDING THE INTEREST/COUPON CONCURRENTLY. Said ultimate pyramid scheme is bound to fail – SPECTACULARLY – at some point. DON”T be a “Burb” when it happens!

  7. michael says:

    My daughter returned to live at home last year. She could not make ends meet on her own. Last weekend my neighbors daughter and son in law moved in. The bubble is still well intact her in the east bay. No obvious end in sight.

  8. NotSoSure says:

    In conclusion, every website that has predicted the stock market top is wrong :)

    Let’s face it, the S&P can still double from here, because we still a ton of -xits to go.

    • nhz says:

      and just like that, RE could still double from here as well if the banksters and politicians want it.

    • r cohn says:

      I was on option floor trader for over 20 years ,trading for my own account and some investors.I had 2 friends both of whom went to MIT, who made over 20 million in about 5 years..On OCT 19,1987 both lost everything plus.
      I had a bad day ,but a very good week.
      Yes ,the market can go higher,but a HUGE correction is not only possible but a %100 sure thing.The only question is when.

      • NotSoSure says:

        The only thing I am sure of is this. Today’s environment has created temporary winners and losers, but when everything ends, everyone will end up losers if not financially then morally or both.

        • nhz says:

          I doubt most of the current winners have any morals; how can they lose morally?

          The elites will only lose if we have a revolution like the French one from long ago, where heads roll in large numbers. I don’t see it happening, the general public has been turned into zombies and too many of them profit from the current policies; they will no longer profit when finally the bill comes due, but by then it will be too late.

          Let’s hope the Western elites turn on themselves instead of first starting WW3 as the ultimate ‘solution’.

  9. d'Cynic says:

    Ben Bernanke just visited Japan to meet with central bank governor Kuroda, and prime minister Abe following a “surprising” electoral victory in a massive endorsement of abenomics. Following the meetings the program will be renamed to – three arrows and seven bullets.

  10. Petunia says:

    As you all already know, I was among the rent poor in Florida and just picked up and left. I saw the doubling and tripling up of families continue throughout the ongoing crisis.

    I would like to add another aspect to the high rent/low income conversation. As I have moved from one rental to another it has been necessary to downsize in every way. The houses get smaller as we try to keep the rent constant. This housing inflation leads to more self imposed austerity, even when we want to spend, because the space isn’t available to accommodate more stuff.

    I think this is the reason you see the young spending on restaurants and events. They can’t store more stuff where they live.

  11. Mark in Denver says:

    My rent just went up 5% here in Denver. The commercial RE market hasn’t
    slowed according to this index you have used in the past, in fact it just increased. Now at 25.8% above the high of August 2007!

  12. Ptb says:

    I had a rental that was supposed to be for three people. Turns out that about a month after they moved in they added 10 more people. 13 people in a 3/2 house. Pulled it off for 9 months.

    • Petunia says:

      This was normal in FL. In one house we rented we would get mail for the old residents, about 50 different people, all kinds of names.

  13. michael says:


    Where the heck did everyone sleep, the floor? What city was this in?

  14. Drumpfabooie says:

    A certain gunmaker from Springfield, MA protects and paid for my remote wilderness home and land/w bugout cave. Not proud of it, but hey a gift horse, gun salesman of the decade doesn’t come along very often. Well, that and OZRK helped out a lot. There is absolutely nothing better than having nothing to be indebted about.

  15. Meme Imfurst says:

    If you are flying high on the up lifting draft, remember where the drafts come from.

    We can not do what a few birds do, stay aloft for months as the Frigate does over open water, the leading edges of tall cliffs, never able to land in the water since it will sink like a rock, to gangly for landing on the cleft’s edge and cling. That does not stop it from stealing the food from other birds on the fly. So in the long run it survives, it does not flourish but on rare occasion of plenty.

    There is no surviving a crowded trade, you rarely see two Frigates in the sky at the same time. What is so different that men think they are better than the natural odds of 50/50.

    The world is full of crowded trades, the past is overwhelming littered with broken ones. Without other birds to steal from the Frigate can not survive.

    Seems humans are not to unlike the Frigate. Thanks to man, there are only so many birds left for the Frigates to dominate.

  16. NYC Millennial says:

    Between the time we sold our NYC apartment (Oct 2015) and bought a house (in contract), we have been renting for these 9 months in a 500-unit apartment building in White Plains, NY (in westchester county north of NYC). We have a 2 bedroom for $2,660/month (not including $50/month dog fee (yes, it exists!), ~$150-200/month utilities and $150/month parking, for another ~$350-400 total). After giving notice, they listed the apartment for 20-30% higher, so base rent between $3,200-$3,400, which fluctuates daily based on how much open inventory they have at any time. It will be very interesting to see what they eventually get for it, but our rent probably would have increased at least 20% had we stayed through the first year lease renewal!

    • d'Cynic says:

      Moving out from rental apartment in a rent controlled jurisdiction is a serious consideration. While the old rent increases are moderated by law, the move to place is not, and can be in the range that you describe. Eventually if not already, it will be a factor in labour mobility, and have an economic impact beyond the bubble.

  17. Mike in Iowa says:

    Two renters in Quad Cities received notice their apartment rents would increase in September $800 to $2,000 and $900 to $1,800.

  18. chris Hauser says:

    also known as “rent’s too damn high.”

    does seem to be a tad much high-priced supply. but lower-priced supply will be needed, unless NOBODY WANTS TO LIVE THERE.

  19. Steven B Smith says:

    Densities can get a lot higher, it what we call “the 3rd world”.


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