Apartment rents soar 5% in 4th Quarter; vacancies decline back to generational low

This morning's release on the apartment vacancy rate and median asking rents was a true "Holy Cr*p!" moment. To cut to the chase, the median asking rent for an apartment in the US jumped by over 5% in the 4th Quarter alone! YoY the increase is about 7%. Here's the graph showing the damage:

Note that the above graph is nominal prices. Because owner's equivalent rent is such a huge portion of CPI, to put this in "real" terms, in the below table I am adjusting by "usual weekly wages," a median measure of income:

In the above table, I have selected a few prior years with interim high and low readings, as well as the last 4 years, and further broken out 2015 by quarter.

Meanwhile the apartment vacancy rate declined back to its generational low:

This huge increase in rents, and decrease in vacancies, happened despite more apartment and condos having been built in 2015 than at any point in almost 30 years:

Note that the building of multi-unit dwellings is following a similar trajectory with the large Millennial generation as it did with the large Boomer generation half a century ago.

With such huge profits to be made, I expect the boom in apartment and condo building to continue, perhaps approaching its 1972 peak within the next few years.

In the meantime, renters - who tend to be among the lowest 2 quintiles in wage earners in the US, who have suffered the biggest hit to median wages - are being really hard hit.