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

To: mishedlo who wrote (34519)	6/27/2005 4:07:07 PM
From: damainman	Read Replies (1) \| Respond to of 306849

"Furthermore houses keep getting bigger and bigger and bigger. That would also need to be factored into any equation" Yeah, I think the NAR should do something with their reporting also...

To: mishedlo who wrote (34519)	6/28/2005 1:42:38 AM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

Furthermore houses keep getting bigger and bigger and bigger. That would also need to be factored into any equation. For sure a portion of median home price appreciation is due to the ever increasing size of the average home in the mix each and every year. With 1/3 of the people renting, let's say 1/3 of the people buying a home and staying in it for years, at BEST you can claim that housing costs are rapidly rising for new first time buyers. I doubt that is 1/3 but adding in those trading up vs those trading down and perhaps that all nets out to 1/3. You can say the same thing for most nonrecurring purchases such as auto, higher education, computer or big screen TV.

To: mishedlo who wrote (34519)	6/28/2005 8:43:24 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 306849

It also affects property taxes but then again refis at lower interest rates helped. In states like CA, it did not affect property taxes at all. so, you pretend that real inflation in taxes doesn't exist just because of a stupid law in California. but they are simply passing the buck: somebody has to pay for tax increases. so, if it's not RE taxes, then it's income taxes, or bracket creep, or higher debt. these things are inflation by any other name. following your logic, there is actually more inflation in Texas real estate than in California. my TX house is up maybe 60% in the last decade, whereas my property taxes are up 100%. by contrast, a similar CA property might be up 200-300% while the taxes are up 15%. but, according to you, TX has the higher rate of inflation, even though my state income taxes are still zero in TX, while CA the state is more indebted and the CA house guy is paying more due to the aforementioned factors. but these factors are not "inflation" by your definition.

To: mishedlo who wrote (34519)	6/28/2005 8:52:51 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 306849

For starters many people own their home for years and are not affected mortgage wise over time. this is the wrong way to look at it, imo. i think what you fail to grasp is that asset inflation is still inflation. Jim Grant pointed that out for years vis-a-vis the stock market in the 1990s (and lately w/r/t the RE bubble). in other words, inflation can be expressed not just directly in consumer goods but in assets. let me explain how i look at it from an MPT perspective. understand here that what i have is a basket of asset classes which in total are a "net worth", of which personal RE is a fixed percentage. you could say that i have an RE "budget" which is defined as a percentage of my net worth. if i lived in CA and was given a RE windfall, i would have a "problem", in that the inflated RE asset would be too large relative to my net worth. if my goal is to keep RE at 10% of net worth, i would have to constantly be trading down to a smaller sized house (funneling the realized gains to other asset classes so as to "rebalance"). exchanging one item (house #1) for a less valuable item (house #2) for the same price (10% of a basket of asset classes comprising the portfolio--house #1 was 10% at some point in the past, but due to inflation the less valuable house #2 is now equal to 10%) is exactly inflation. it is exactly like the person who has budgeted $6 for a movie now cannot watch the evening shows and must catch the matinee, or the lady who must eat cat food instead of steak. IOW, it is a "substitution trade" which is a direct expression of inflation.