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Why do you say that housing costs are not part of CPI? They make up 25%+ of CPI, don't they? See https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-r

Why do you say that housing costs are not part of CPI? They make up 25%+ of CPI, don't they? See https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... Are you saying that the Owner's Equivalent Rent calculation is not the same as housing costs? That sounds like a stretch. Would someone help me understand what I'm missing here?

alexmingoia 6y ago
You’re not missing anything. Housing is included in CPI as rent. Housing purchase prices aren’t included because they represent both current and future housing consumption (people don’t consume a house within a year).
- petra 6y ago
  Don't rent and housing purchase prices follow each other, roughly ?
  - stevehawk 6y ago
    Nope. They can go inverse when, say, an economy collapses and everyone is forced out of their homes as they go underwater on their mortgages and but they still need somewhere to live. Kind of like 2008/09
    - vonmoltke 6y ago
      > an economy collapses and everyone is forced out of their homes as they go underwater on their mortgages People are not forced out of their homes when their mortgages go underwater, they're forced out when they can't afford to pay the mortgage (underwater or not).
      - stevehawk 6y ago
        or if the bank calls in the note because the asset/collateral becomes devalued.
  - deleted 6y ago
    [deleted]
  - typ 6y ago
    Housing_price = rent * reciprocal_of_interest_rate
refurb 6y ago
You’re not missing anything. You just decided to look up the actual answer rather than just guessing what it was.
api 6y ago
Problem is that outsourcing and automation has collapsed the cost of most non-essential manufactured goods. These artificially depress the CPI and hide the crazy inflation that is occurring in essential areas like housing, health care, and education... basically in anything that can’t be outsourced or automated. Massively aggregated statistics like the CPI border on bullshit. They have too many hidden variables and gloss over far too much detail.

alexmingoia 6y ago

You’re not missing anything. Housing is included in CPI as rent. Housing purchase prices aren’t included because they represent both current and future housing consumption (people don’t consume a house within a year).

petra 6y ago
Don't rent and housing purchase prices follow each other, roughly ?
- stevehawk 6y ago
  Nope. They can go inverse when, say, an economy collapses and everyone is forced out of their homes as they go underwater on their mortgages and but they still need somewhere to live. Kind of like 2008/09
  - vonmoltke 6y ago
    > an economy collapses and everyone is forced out of their homes as they go underwater on their mortgages People are not forced out of their homes when their mortgages go underwater, they're forced out when they can't afford to pay the mortgage (underwater or not).
    - stevehawk 6y ago
      or if the bank calls in the note because the asset/collateral becomes devalued.
- deleted 6y ago
  [deleted]
- typ 6y ago
  Housing_price = rent * reciprocal_of_interest_rate

refurb 6y ago

You’re not missing anything. You just decided to look up the actual answer rather than just guessing what it was.

api 6y ago

Problem is that outsourcing and automation has collapsed the cost of most non-essential manufactured goods. These artificially depress the CPI and hide the crazy inflation that is occurring in essential areas like housing, health care, and education... basically in anything that can’t be outsourced or automated. Massively aggregated statistics like the CPI border on bullshit. They have too many hidden variables and gloss over far too much detail.