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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (62996)	6/22/1999 8:26:00 PM
From: BGR	Respond to of 132070

Ben, That's another very good point as to why rent and not house prices are more suitable candidates for measuring inflation. Thanks much! -BGR

To: benwood who wrote (62996)	6/22/1999 8:40:00 PM
From: Freedom Fighter	Read Replies (2) \| Respond to of 132070

Ben, I suspect that over the long haul there is a close relationship between rents, incomes and the cost of home ownership - including non mortgage expenses like taxes, maintenance, repairs etc.. The renter does not put up a down payment, closing costs etc... So he gets a return on that investment that in some way offsets rent increases. He also increases his income. There are ways of valuing real estate that look at the after tax cost of both ownership and renting and the return on investment from owning a place and renting it out compared to alternatives. I am far from expert on this but I would guess that those that are do a pretty good job of it. It's an interesting discussion and obviously there are different points of view on whether housing costs can tell us something that rents alone cannot. I think they do. I think the biggest argument against it is that housing prices tend to be more volatile than rents. Wayne

To: benwood who wrote (62996)	6/24/1999 2:38:00 AM
From: Simba	Respond to of 132070

Actually rents have gone down or stayed flat in Seattle area because many people are being herded from apartments to purchase any home they can afford as this is a chance in a lifetime low interest rate lock-in environment. Now that the interest rates are climbing the realtors are getting new houses finished in a hurry and also telling people to buy a house before it gets any worse. I know personally, I have been a renter for the last few years and my rent has stayed flat. In fact many apartments are vacant and giving deals tomove in. On of my friends said that his apartment voluntarily reduced his rent ( This was unheard of for me!). Clearly the real-estate asset prices have inflated beyond norms and many times than the rate of other prices such as food etc. CPI is a manipulated figure that seems to not reflect the inflation in equities and housing. I will not be surprised if there is a big crash there were many foreclosures or if the house price went the other way as they have in some parts like California during more difficult times. Today (6/23) Bill Gross of PIMCO also talked about house price inflation being in tandem to equity price appreciation.