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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Haim R. Branisteanu who wrote (5377)5/1/2004 3:49:26 AM
From: Elroy Jetson  Read Replies (2) of 116555
 
The CPI has been using "equivalent rent" since before 1979, probably since it was first developed. (On the other hand, Alan Greenspan headed a bipartisan commission in the 1990's to essentially short-change Social Security recipients by using "quality adjustments" to under-count inflation in the CPI.)

I worked on a project at Chevron in 1979 to develop a real estate index. At that time the BLS prepared CPI used "equivalent rent" and they had a complete time-series back to 1928. Here's a chart which followed from that report where you can see the comparison between "equivalent rent" and home prices.

home.pacbell.net

What the BLS did not have in 1979 was any index of home prices. There is a different series, National Wealth, which contained a rough estimate of the total value of all real estate in the United States. In fact there are virtually no time series of real estate.

It turned out one of the few real estate price time-series which existed was an index of "same home" appraisals, every six months, since 1895 which was maintained by the Los Angeles Appraisal Association. For the past few decades this series has been maintained by the Real Estate Research Council at Cal State Pomona in cooperation with the Appraisal Institute.
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