Owners' Equivalent Rent - OER
Categories: Real Estate
Owners' equivalent rent (OER) is the hypothetical amount a homeowner could get for their house if they rented it out. For the layman, it's also called “rental equivalent."
The OER is a BFD. It’s the single biggest factor in the U.S. Consumer Price Index (CPI). The CPI measures baskets of goods consumers pay for over time. Education, food, gas...you buy it, it’s likely represented somewhere in the U.S.
Since paying rent or a mortgage takes a good chunk out of your paycheck, the OER is a good chunk of the U.S. CPI, too.
The Bureau of Labor Statistics (BLS) tracks the OER by asking homeowners roughly, "if you rented out your house today, with no furniture or utilities, how much would you rent it for monthly?" Since most homeowners have an idea of local prices in their area, the OER is a highly-cited stat for those interested in changes of value in real estate.
Next time you hear OERRR, it might not just be another dismal economist groaning.
