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

To: GraceZ who wrote (81206)	7/15/2007 3:05:34 PM
From: JBTFD	Read Replies (1) \| Respond to of 306849

I think if they wanted to be more accurate with monitoring housing inflation they could use two parts, each weighted proportionately to the weight in the population. They could have a renters part, which would be something like 30% weighting and would be the same as the now used rental equivalency. Then they should have a housing cost part, which would reflect actual housing prices. This currently would have a weighting of 70% or so: whatever the homeownership rate is. I think this would more accurately reflect inflation. I think it is a little disingenuous to pretend that rising housing prices are not inflationary.

To: GraceZ who wrote (81206)	7/15/2007 5:05:40 PM
From: GST	Read Replies (1) \| Respond to of 306849

Actually Grace you have it wrong on housing and inflation. A house is not a promise to pay cash in the future -- while that is what a bond is, along with regular cash payments to pay "rent" on the money. Housing on the other hand is a hard commodity -- and yes it can be a useful one at that. Housing prices go up in inflationary times because money is depreciating and is risky to hold. People take a short position on cash by borrowing to buy a house and then go long housing by buying a house -- that is the traditional relationship between cash and housing in an inflationary environment -- short cash, long housing.