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The US is currently moving toward recession due to a perceived need to reduce core inflation, which is 40% determined by the price of rent. However, it strikes me that the Covid-19 pandemic abruptly altered the nature of the rent relationship, with landlords potentially unable to evict tenants for a year or more, or facing other restrictions on future price increases. These would certainly weigh on my mind if I were renting out a property. Does the current increase in rents as measured accurately reflect ongoing inflationary pressures?

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  • I note a close vote for "not about governments, etc.". While the title question is not political, elements of the question focus on government policy: eviction moratoriums and rent control.
    – Rick Smith
    Sep 23 at 16:41
  • "landlords potentially unable to evict tenants for a year or more, or facing other restrictions on future price increases. " Not sure if this is true. Are there some sources for this? What is the extent of the restrictions?
    – Trilarion
    Sep 23 at 17:45
  • @RickSmith Agreed. It's more an economy or maybe economic politics question (if the restrictions are real and politically motivated).
    – Trilarion
    Sep 23 at 17:46
  • it doesn't make sense that inflation could cause rents to rise more than inflation. It doesn't make much sense aside from that; real estate doesn't face nearly the same pressures that are driving other prices up: labor, supply chain, fuel costs, etc...
    – dandavis
    Sep 27 at 7:07

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Inflation as such is clearly not the only effect, even at a national level.

Consider the present situation with interest rates that have been seriously low for some time. This has made mortgages much less expensive, and so has encouraged many people to buy houses and condos rather than renting. In many cases a modest mortgage is cheaper than rent. Not, of course, in all housing markets.

If interest rates rise then mortgages become more expensive. This means fewer people will buy houses and condos. This means fewer houses and condos will be built, and people who would have purchased a house or condo must find rental accomodation. The net is that rising interest rates can kick the rental market up.

To a point, of course. And presuming the right starting conditions. With different starting conditions an increase in interest rates would have different results. And if interest rates rise very sharply it could mess up the entire economy. So it is not the case that arbitrarily large interest rates at an arbitrary time will raise rents.

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