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To: Ken98 who wrote (16237)	9/6/2000 12:47:19 PM
From: LLCF	Respond to of 436258

<But, somehow BLS comes up with a reduction in the housing cost component of CPI. Hummmm > On average homes are better than last year, by slightly more than the increase in their price. <gg> DAK

To: Ken98 who wrote (16237)	9/6/2000 1:13:55 PM
From: Les H	Respond to of 436258

They're using appraisal prices, such as for refi's and home equity loans, as part of the calculation. These are going to skew the values lower since these homes are not up for sale and subject to the demand pressures that were there for homes. car.org

To: Ken98 who wrote (16237)	9/6/2000 3:55:33 PM
From: XBrit	Respond to of 436258

<< But, somehow BLS comes up with a reduction in the housing cost component of CPI. >> I have a very important question about this. Right now, there is a 6% or so annual rate of increase going on in housing, an item which is 40% of the CPI. But the BLS does not "see" it because they only survey rental prices. So, the critical question: has the BLS completely suppressed this component of inflation, or merely postponed the moment when it shows up? I guess this partly depends how they measure rents. If they survey average levels of rents ACTUALLY PAID, there is likely to be maybe 12 months time lag because typical rentals are on 1-2 year leases and/or landlords don't realize for a while that they have a profit opportunity. Does anybody know if this is the methodology used? If so, I think we are heading for a REALLY nasty inflation surprise this winter as both energy prices and rental costs finally have their full impact on the CPI.