Does a Lack of Competition Exacerbate Inflation? A Case Study of Florida Rental Markets

Abstract

Specific sectors of the U.S. economy, such as electricity, rental, and food, substantially contribute to overall inflation, and each of these sectors has experienced increasing concentration, which may exacerbate inflation, by, inter alia, facilitating price coordination. To investigate this relationship, we examine all non-owner-occupied housing properties, as well as all multifamily properties, in Florida, areas of which have exhibited rampant inflation. For each Census Tract in the state, we analyze the consolidation of property ownership from 2015 through 2022. We then test whether such consolidation explains increases in rental prices or increases in rental inflation or both, controlling for other potentially confounding factors. We find economically and statistically significant effects in both relationships. The policy implication of such findings is that, rather than leaning on the Federal Reserve to combat rental inflation by raising interest rates, legislative bodies or regulatory authorities could impose ownership limits on holdings within a given Census Tract.