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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (30287)	4/28/2005 3:18:30 PM
From: bentway	Read Replies (1) \| Respond to of 306849

Rents haven't gone up much in the bubble areas, but the cost of buying a house (counted as "equivalent rent" in the CPI) has skyrocketed. In non-bubble flyover country, prices are flat and rents have declined. Since these figures are boiled down to national figures, they understate inflation in the bubble areas, but it's there, and sharply felt. I'm not really sure how "equivalent rent" is calculated. If it's by finding an equivalent house in the area for rent, that alone would distort the CPI, because as has been pointed out here repeatedly, in the bubble areas, current mortgage payments cannot be covered by rental. You can rent a house cheaper than buying it. cepr.net "The New England region has been at the center of this run-up in home prices, experiencing an increase in home sale prices that exceeded the overall rate of inflation by more than 70 percentage points over this period. "