Consumers do not buy stocks - they invest in stocks. Till you understand this basic difference, it is meaningless to discuss inflation with you! Same goes for the house. If you buy an egg, you eat it (or whatever) and that's it, it's gone. When you buy a house, you have the house, any future price increases are part of your capital gains (perhaps unrealized, but the same as in stocks). Any future increase does not affect your future budget.
How one can lack such basic economic understanding boggles my mind!
So not everyone owns a home, but who is holding a gun to their head and forcing them to buy? They can always rent. I do.
Now rent, that is a different issue from real estate prices as future increases affect your budget and you also get no assets in return. In the past 10 years living in the Boston area, I have a cumulative rent increase of less than 100%, which amounts to roughly 7% per year. Which has outpaced inflation, but not by a huge factor (some 3.5%, I believe, on average). This 3.5% yearly gain is roughly offset by the drop in my utility and computing bills. Some inflation!
-BGR. |
