Apartment landlords continued to impose hefty rent increases as 2012 drew to a close, although there are some early indications they could be losing their leverage with tenants.The average nationwide monthly apartment rent was $1,048 in the fourth quarter, up 0.6% from the third quarter and up 3.8% from a year earlier, according to a report set to be released Tuesday by real-estate research firm Reis Inc. The year-over-year increase was the largest since 2007 and a sign that landlords still have the upper hand they regained in 2010.The nation's apartment vacancy rate, which has declined since hitting 8%in the aftermath of the financial crisis, fell to 4.5% from 4.7% in the third quarter. The rate is the lowest since 2001's third quarter.
Shelter, the service that housing units provide their occupants, is a major part of the CPI market basket—the goods and services that people need for day-to-day living. Two CPI indexes, Owners’ equivalent rent of primary residence (OER) and Rent of primary residence (Rent), measure the change in the shelter cost consumers receive from their primary residences.Housing units are not in the CPI market basket. Like most other economic series, the CPI views housing units as capital (or investment) goods and not as consumption items. Spending to purchase and improve houses and other housing units is investment and not consumption. Shelter, the service the housing units provide, is the relevant consumption item for the CPI. The cost of shelter for renteroccupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes.
US 10 year treasuries (TNX) appear to be signaling this.