3 ms·
Rents are negotiated for a fixed period of time and are not necessarily increased to the market rate every year, hence the current price being paid being a lagg
by jfim 3y ago
Rents are negotiated for a fixed period of time and are not necessarily increased to the market rate every year, hence the current price being paid being a lagging indicator of market prices.
If you were tracking the inflation of banana prices and the market price for bananas went up 10% year over year, does someone having a fixed price contract from a year ago affect the actual inflation of banana prices?
- cman1444 3y agoYour definition of "actual price" is different than what it should be. The CPI should show an average of what the populace is currently paying for rent. That is to say some people are locked into a low rate from years ago. Some people are locked into a slightly higher rate from a year to just a few months ago. Still others are paying market rates if they just negotiated their prices recently. CPI does not and should not show only what those paying the current rates are paying. It should show an average of what the entire population is paying.