Last week, Federal Reserve Chair Jerome Powell dove into the debate over rent inflation and suggested that while new lease rent growth is slowing, "there's still some significant (rent) increases coming" via cheaper lease renewals hiked up to market level.
But RealPage data show that's NOT exactly true for market-rate apartments. U.S. apartments plunged back to the long-term average in "loss to lease" – which means the runway for renewal lease rents will significantly narrow going forward.
"Loss to lease" is the gap between today's market asking rents and the average in-place rent (aka embedded or contract rent, which is what the CPI attempts to measure). As a general rule of thumb: The larger the loss to lease, the larger the renewal increase.
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