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

To: Wyätt Gwyön who wrote (34547)	6/28/2005 11:09:51 AM
From: mishedlo	Read Replies (1) \| Respond to of 306849

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. So when home prices crash will you call it deflation since you seem to be insistant that rising home prices equals inflation? Do you want it both ways or only one? Mish

To: Wyätt Gwyön who wrote (34547)	6/28/2005 11:24:27 AM
From: mishedlo	Read Replies (3) \| Respond to of 306849

I forgot to ask.... Since you want the CPI to reflect asset appreciation do you want it to reflect gains or losses in the stock market as well? It would seem to be consistant with your wanting home prices reflected in the CPI. What % of the CPI should stocks be? What about treasuries? If a renter never buys a house and never will buy a house does his cost of living go up even if rents don't? 35% of houses sold in 2004 were for INVESTMENT purposes does it makes sense to place in the CPI those investments but not stock investments? Look there are plenty of things dead wrong about using house prices as a CPI measurement. That does not imply that OER is perfect as it is not but I believe what you are asking for would be worse. Mish