The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Haim R. Branisteanu who wrote (43553)	10/15/2005 11:48:38 AM
From: mishedlo	Read Replies (1) of 110194

Haim I am convinced the housing number is understated. I am equally convinced it it be far more distorted (the other way as in over stating inflation) if new home prices were used. There are huge areas of the country (geographically) that have seen almost no (if any) appreciation and not everyone buys a new home every year. Danville Illinois and most like small town central to southern Illinois accross the board. I will guess Indiana and Ohio and Michigan the same way. Furthermore, nearly everyone here expects a housing crash. Would they want a switchover to a new method now? Rent prices should be adjusted to what rent prices are. Period. I do not think they have done that. I have no problem with using rent prices. The problem with median home prices is houses keep getting bigger and bigger and bigger and bigger. There are also quality issues. People are buying all kinds of upgrades (like marble baths, and granite countertops) that they can not afford. 3 car garages and decks instead of 2 car garages and no deck. These things make "median" or "average" prices meaningless. Perhaps some combination of rental prices based on sq ft and number of bedrooms, and % turnover in new houses (hedonically adjusted for quality and features), etc etc is the way to go (for accuracy). What I propose would be reasonably accurate (if the data collected was quality enough) but does anyone propose the govt wast money by doing that? Haim, here is the real solution: We should abolish the FED and let the market set rates. They never would have got to 1% in the first place and this boom would not have gotten so insane. Mish

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