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A market flush with capital sounds great, but in reality, we are now living out the consequences of having enjoyed a long ride in a bull market. Put simply, there was a lot of money in our economy the last several years, which then combined with the economic stimulus action taken during the pandemic, acted as a catalyst for inflation to rise. Combined with incredibly low interest rates, the market was booming with increasing prices across the housing and rental sectors hitting historical highs.
As we shift into this correction, the overall US inflation rate has hit 8.6% as of May. In an attempt to stabilize the economy, the Federal Reserve is now implementing their strategy to cool the economy down by increasing the interest-rate to a high not seen since 1994, targeting a benchmark range between 1.5% and 1.75%. Why is this important? When it comes to housing, with its limited supply just like gasoline and other consumer goods, inflation can further drive up the costs period. If the Fed’s attempt to tame this is effective, we can anticipate seeing the frenzy of higher and higher housing prices leveling out, and potentially dip down. So, which markets are experiencing the highest surges in inflation, and where is this correction most likely needed? Let’s take a look…
10. Washington, DC
May Inflation Rate: 7.5%
Average Rent (1BR): $2,261
Average Price for a Gallon of Gas: $5.04
9. Boston, MA
May Inflation Rate: 7.5%
Average Rent (1BR): $3,634
Average Price for a Gallon of Gas: $4.99
8. Los Angeles, CA
May Inflation Rate: 8.0%
Average Rent (1BR): $2,661
Average Price for a Gallon of Gas: $6.33
7. Chicago, IL
May Inflation Rate: 8.0%
Average Rent (1BR): $2,080
Average Price for a Gallon of Gas: $6.02
6. San Diego, CA
May Inflation Rate: 8.3%
Average Rent (1BR): $2,756.
Average Price for a Gallon of Gas: $6.32
5. Denver, CO
May Inflation Rate: 8.3%
Average Rent (1BR): $1,879
Average Price for a Gallon of Gas: $4.86
4. Minneapolis, MN
May Inflation Rate: 8.7%
Average Rent (1BR): $1,621
Average Price for a Gallon of Gas: $4.72
3. Dallas, TX
May Inflation Rate: 9.1%
Average Rent (1BR): $1,474
Average Price for a Gallon of Gas: $4.67
2. Riverside, CA
May Inflation Rate: 9.4%
Average Rent (1BR): $2,074
Average Price for a Gallon of Gas: $5.56
1. Tampa, FL
May Inflation Rate: 11.3%
Average Rent (1BR): $1,834
Average Price for a Gallon of Gas: $4.69
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About the Author
Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.
Ellie is the host of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can read more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
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