Footnote: RSNT rent index
This footnote is for readers who want to know more about the methodology behind our RSNT rent index.
We’ve created a simple index to track changes in market-rate rents for older housing units in West Hollywood. It’s the average rent paid by new tenants in rent-stabilized housing, adjusted for unit size. We’re calling it the Rent Stabilized New Tenant (RSNT) rent index.
The chart below shows historical values for the index in green. The other lines are the average rents paid by new tenants, calculated separately for 0, 1, 2, and 3-bedroom units. You can see the values by hovering over or touching the points and lines.
Questions and answers about the RSNT rent index
Why focus on rent-stabilized housing?
Three reasons: First, rent stabilization covers almost 17,000 units, the bulk of the city’s rental housing. Second, rent stabilized housing was built before 1979, and we want an index for older housing to complement other indices that may lean toward newer units. Third, the data is available back to 2001.
Why focus on new tenants?
Rent stabilization limits rent increases for existing tenants, but initial rents for new tenants are unlimited/market-rate.
How is the index calculated?
Once a year, the City reports average rents paid by new tenants in rent-stabilized studios, one-bedrooms units, two-bedroom units, and (in some years) three-bedroom units. We calculate the average of these rents, but we adjust (“weight”) the average because there are a lot more one-bedrooms in the housing supply, and more two-bedrooms than studios. The adjustment is based on the number of rent-stabilized studios, one-bedrooms, and two-bedrooms in 2014. We exclude three-bedroom units, because we don’t have the rent numbers for recent years and they don’t change the answer much for earlier years.
How does this index differ from one like the Zillow Rent Index?
The RSNT rent index is very simple. It’s an average of actual move-in rents reported to the City. It’s limited to West Hollywood and to older housing units. Older units that are exempt from rent stabilization (most single-family homes and condominiums) are excluded.
The Zillow Rent Index, as we understand it, is a broader, more theoretical index. It’s based on their analysis of how factors like location and unit size drive rents. It’s not sensitive to which particular apartments happen to be available for rent in the period. So it’s stable and good for comparisons, but not the same thing as an average of actual rents.
We also suspect that the Zillow Rent Index may be better attuned to newer, higher-rent units. Their analysis uses rental listings, and we’re guessing that landlords are more likely to list newer, higher-rent units online.