5 ms·

I don't think it's an issue of inflation. Inflation has been super low for the past decade or more. Everything else is cheap, it's just housing that's expensive

by mcv 5y ago

I don't think it's an issue of inflation. Inflation has been super low for the past decade or more. Everything else is cheap, it's just housing that's expensive. It's a combination of scarcity and speculation leading to more artificial scarcity. Make it less attractive for speculators and build more houses.

birbs 5y ago
Inflation is extremely high: https://www.aei.org/carpe-diem/chart-of-the-day-or-century/ https://www.aei.org/carpe-diem/chart-of-the-day-or-century/
- GlennS 5y ago
  How do you take "inflation is extremely high" from that chart? 56% over 20 years is 2.25%ish per year.
- mcv 5y ago
  Looks like inflation has spiked in the last few months in the US, but that's after a long period of fairly low inflation. Compared to the past century, it's not that extreme yet; the 1970s and 1980s had higher inflation[0]. And the high house prices are not something from just the past few months, so it's really not inflation that's causing it. My personal experience is Netherland[1] where the period of low inflation still continues, and house prices have also been shooting up for quite some time. We sold our previous house for 25% more after 8 years, and our current house has increased 25% in value after only 4 years. And even before I bought my first house, I was dismayed at the ridiculous house prices and wanted to wait until the whole thing crashed. (It did crash shortly after we bought our first house in 2008, but even that barely hurt the value of our house.) [0] https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi (click 'max' to see the full graph) [1] https://tradingeconomics.com/netherlands/inflation-cpi https://tradingeconomics.com/netherlands/inflation-cpi
pigeonhole123 5y ago
How is the CPI a useful measure of inflation if it ignores the things people actually have to spend money on like housing and healthcare?
- em500 5y ago
  It wouldn't be, if it did that. Fortunately it doesn't ignore those. In the US CPI calculation, housing has around 42% weight, medical care around 9%. Source: https://www.bls.gov/cpi/tables/relative-importance/2020.htm https://www.bls.gov/cpi/tables/relative-importance/2020.htm
  - pigeonhole123 5y ago
    I think this is only rent? Most people don’t want to rent their whole life in the US https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
    - em500 5y ago
      It uses actual rents for renters and owner-equivalent rents for owners. This does not assume at all that people want to rent their whole life. (The main assumption it relies on is that owners do not systematically understate what they think their own house could be rented for.)
      - pigeonhole123 5y ago
        So as long as the interest rates stay extremely low then this hold true?
- imtringued 5y ago
  You don't pay for the house. You pay for the mortgage. The mortgage is accounted for in the CPI and man gets this tiring. The housing component of the CPI has always been 3% for decades. It's one of the few things dragging it up to 2%. If you have a higher interest mortgage the value of the house goes down but you still have the same monthly payment.

by mcv 5y ago

birbs 5y ago

Inflation is extremely high: https://www.aei.org/carpe-diem/chart-of-the-day-or-century/ https://www.aei.org/carpe-diem/chart-of-the-day-or-century/

GlennS 5y ago
How do you take "inflation is extremely high" from that chart? 56% over 20 years is 2.25%ish per year.
mcv 5y ago
Looks like inflation has spiked in the last few months in the US, but that's after a long period of fairly low inflation. Compared to the past century, it's not that extreme yet; the 1970s and 1980s had higher inflation[0]. And the high house prices are not something from just the past few months, so it's really not inflation that's causing it. My personal experience is Netherland[1] where the period of low inflation still continues, and house prices have also been shooting up for quite some time. We sold our previous house for 25% more after 8 years, and our current house has increased 25% in value after only 4 years. And even before I bought my first house, I was dismayed at the ridiculous house prices and wanted to wait until the whole thing crashed. (It did crash shortly after we bought our first house in 2008, but even that barely hurt the value of our house.) [0] https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi (click 'max' to see the full graph) [1] https://tradingeconomics.com/netherlands/inflation-cpi https://tradingeconomics.com/netherlands/inflation-cpi

pigeonhole123 5y ago

How is the CPI a useful measure of inflation if it ignores the things people actually have to spend money on like housing and healthcare?

em500 5y ago
It wouldn't be, if it did that. Fortunately it doesn't ignore those. In the US CPI calculation, housing has around 42% weight, medical care around 9%. Source: https://www.bls.gov/cpi/tables/relative-importance/2020.htm https://www.bls.gov/cpi/tables/relative-importance/2020.htm
- pigeonhole123 5y ago
  I think this is only rent? Most people don’t want to rent their whole life in the US https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
  - em500 5y ago
    It uses actual rents for renters and owner-equivalent rents for owners. This does not assume at all that people want to rent their whole life. (The main assumption it relies on is that owners do not systematically understate what they think their own house could be rented for.)
    - pigeonhole123 5y ago
      So as long as the interest rates stay extremely low then this hold true?
imtringued 5y ago
You don't pay for the house. You pay for the mortgage. The mortgage is accounted for in the CPI and man gets this tiring. The housing component of the CPI has always been 3% for decades. It's one of the few things dragging it up to 2%. If you have a higher interest mortgage the value of the house goes down but you still have the same monthly payment.