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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Win-Lose-Draw who wrote (43493)	10/14/2005 2:36:58 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 110194

First, the BLS method for shelter doesn't include debt service, so our discussion is theoretical. You apparently felt that since the "median mortgage payment has barely budged over the past few years" the CPI for shelter is reasonable. Lets assume CPI did include debt service as you are suggesting. If everyone started with the same mortgage, and then 49% purchased a new home with twice the debt service - the median would stay the same. The average would increase. If X is the median and average mortgage at the beginning (they are equal), then at the end the median would still be X, but the average would be 1.5X. So if, as you suggest, mortgage payments could be a surrogate for shelter CPI, then the average is correct - the median is useless. Its an interesting discussion if debt service should be included in the cost of shelter. I just find it amusing that the cost of shelter has barely changed (according to the CPI), although the nation is dedicating a far larger amount to shelter.