MultiFamily Market Outlook - 02/26/2007 (Plain Text Version)

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In this issue:
Quarterly Update: Rents Up, Condo Absorption Surprisingly Strong
Year Ends with a Surge in Multifamily Starts
Real Rents Remain High, with Slight Year-End Drop
A Steady Economy, with Low Inflation, Low Interest Rates
Multifamily Stocks Again Show Record Performance

Real Rents Remain High, with Slight Year-End Drop

In the final month of 2006, real rents retreated very slightly from the record high they reached in November, according to the latest Consumer Price Index (CPI) data.

While the overall CPI increased at a seasonally adjusted annual rate of 6.7%, the residential rent component of the CPI narrowly missed keeping pace, increasing at an annual rate of 5.9%. In nominal terms, the strength in residential rents has been quite consistent, with the annual rate of increase staying above 4% for seven consecutive months. Because overall inflation was somewhat higher than this in December, however, the real rent index (which adjusts rent changes for overall inflation) dropped, but only by a tiny tenth of a point—from 109.4 to 109.3.

This still is the second-highest number recorded since 1981, the point at which consistent data series become available to compute the real rent index. The index first reached the 109 mark in October 2006.