Criticizing Wall Street Journal stories is turning into this month's theme (see my post yesterday re their failure to put the retail sales data in context and Saturday for ignoring seasonality and year over year change in their coverage of housing inventory). Yesterday the WSJ ran a story headlined, "Home Seller's Pain is Renters' Gain" with the lead, "There's one bright side to the housing crisis: some lower rents." The data buried in the story almost totally contradict these conclusions. Here are the key data points:
- The data is from the REIS 4th Quarter 2007 report, which tracks 79 markets.
- In five markets (6% of the covered markets, all in Florida) rents declined since the third quarter. The worst market was Tampa, where effective rents declined 0.6% from the third quarter. The median third quarter rent was $789, the fourth quarter rent was $784, so in the worst rental market in the country median rents declined a whopping $5. There's a renter windfall for you.
- "In 38 other markets including Chicago, Boston, and St. Louis, rents rose during the fourth quarter, but by less than the national vacancy growth rate of 0.9%." Presumably someone at the Journal knows that rents and vacancy are different things, and they meant "national median rent growth rate" (does anyone edit these stories?). Adding in the 5 declining markets, that means 43 of 79 markets had below average rent growth. Not exactly news if you understand what an average is.
- "Vacancy rates fell in 47 of the 79 markets tracked by REIS, and average rents saw their largest fourth quarter increase since 2000." So, we had the largest average rent increase for the applicable period in 7 years, and the headline is "Renter's Gain?"
Charitably, this is a really bad case of seeing the story you expect to see in the data. I've looked at a lot of REIS quarterly reports, and there are always a handful of markets which are down. No doubt there is some mild softening in Florida markets (those same markets where rents spiked because rental units were converted to condos), but it just wrong to present this as a meaningful national trend.
|