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

To: damainman who wrote (34476)	6/26/2005 2:29:39 PM
From: bentway	Read Replies (1) \| Respond to of 306849

If they didn't do it, they'd have to fudge inflation figures some other way. Certainly a valid question, when the typical American's largest recurring expense isn't really counted in inflation. Flip the idea. Instead of counting rent, have renters estimate the Renter's Equivalent Mortgage!

To: damainman who wrote (34476)	6/26/2005 3:18:30 PM
From: mishedlo	Respond to of 306849

Why use rent at all for the cpi when about 70% of Americans own their homes? They're trying to use 30% of America to represent all of us? Why use housing prices when it does not affect those that already own their house? Does it or does it not primarily affect new purchasers? Someone who bought a house 10 years ago is still paying the same or less interest every month on his mortgage. It would be grossly incorrect to use housing prices only. Note: I am not saying their method is correct I am saying the opposite extreme is not correct either. BTW I fully expect that is house prices start to decline, they will switch to measuring CPI by actual house prices back adjusted to the peak. Mish

To: damainman who wrote (34476)	6/26/2005 4:51:02 PM
From: Moominoid	Respond to of 306849

Using the idea of rent is logical to measure consumption and the cost of consumption. The only problem with it is if there is a premium for owner-occupation it isn't counted in this model (and it's real big at the moment). Certainly one shouldn't be including principle payments in the cost of consumption because that is investment pure and simple. My problem is more with how they estimate it.

To: damainman who wrote (34476)	6/26/2005 9:05:18 PM
From: SouthFloridaGuy	Read Replies (2) \| Respond to of 306849

I actually prefer that rent is used because it's value is more absolute and doesn't change dramatically with rapid changes in the financing rate. The cost of rent is the true cost of living because renting is always a viable option and owning a house is not a birthright.