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Tracking 73 Years of Rising New York City Rents

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It's a given that NYC apartments today cost more than they did in 1940, but just how much more? Bloomberg's Mark Gimein investigates the rise of NYC real estate prices, and it turns out the median rent in the city has increased 2,787 percent since 1940, from $38.10/month to $1,100/month. The rent of Gimein's own 1BR in Williamsburg rose 6,629 percent, from $18 to $24/month in 1940 to $1,615/month today. It turns out government measurements of rent increases?which say that rents have gone up 1,014 percent since 1940?are rather inaccurate.

The most important insight in their work is that for decades the inflation measures skipped over the cases in which a tenant moves out. Think about that for a second: A landlord avoids raising the rent for a decade for a good tenant, then when the tenant moves, ups the rent to a market rate. Or, as is common in New York, rent regulations keep rent from rising until a tenant moves out. Those are precisely the units in which the rent is most likely to rise, and for some four decades they weren't counted in inflation. Crone, Nakamura and Voith estimate that this and other problems bring down the government's measure of rent increases by about 1.4 percent a year for the whole period that runs from 1942 to 1985. Nakamura outlines these findings in a very readable paper published by the Philadelphia Fed. Over such a long period, 1.4 percent into a really big number. Add that in, and instead of falling 20 percent in real-dollar terms over six decades, rents rise 50 percent.

· 4 BRs, $29,750 a Month: a Story of Inflation [Bloomberg]
· Market Analysis coverage [Curbed]