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Based on my anecdotal experience this seems to very much understate inflation. How is housing up only 3.8%? This site says over 17% rent increase nationally ov

Based on my anecdotal experience this seems to very much understate inflation. How is housing up only 3.8%? This site says over 17% rent increase nationally over the last year: https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data which seems to be more accurate. Anyone with a web browser knows that home prices have experienced a monumental increase. Also a trip to the grocery store appears to cost me 50% more now for essentially the same goods. Every trip to the store pre-covid cost me around $100, now its $150. I do buy primarily proteins so that is the source of the increase but to ignore that seems ill advised. Not generally a conspiracy theorist but unless the people that built this report are using some accepted formula that is very different than the real world this report seems to be intentionally underselling inflation.

gangaputra 5y ago
Lots of good replies here. One other thing to be conscious of is that inflation expectations play a large role in determining how actual inflation will pan out, so to raise the alarm on it in earnest is to the play a very dangerous game.
mitigating 5y ago
That site only does apartments for rent not purchased condos or houses right?
- wonderwonder 5y ago
  Perhaps but even if that is the case, the general consensus appears to be that home purchase prices increased ~17 - 19% over the last year so right in line with the estimate by this site. If anything it would drag the estimate upwards.
  - Rebelgecko 5y ago
    OTOH, low interest rates have balanced that out, and let people who already have mortgages lower their monthly payment drastically. I wonder if monthly payment is perhaps a better metric than purchase price? At least for me, that's what actually determined how much home I'd be able to buy.
kahrl 5y ago
Seriously. This is such nonsense. Housing prices have risen 19% year over year.
- seventytwo 5y ago
  Housing prices are affected by more factors than just inflation…
- whimsicalism 5y ago
  My rent is down hundreds of dollars year over year as is it for most people I know.
  - bluetwo 5y ago
    What city?
    - whimsicalism 5y ago
      San Francisco? https://www.zumper.com/rent-research/san-francisco-ca https://www.zumper.com/rent-research/san-francisco-ca
  - Supermancho 5y ago
    > My rent is down hundreds of dollars year over year as is it for most people I know. What static US locations are "the people you know" living in? OFC you can get cheaper rent moving to more remote and primitive housing, but that's a misrepresentation anyway. From California, to Seattle, to the midwest, all rents have increased at least every other year. Your statement is literally unbelievable.
    - orhmeh09 5y ago
      Mine in Seattle has not, even if I believe you in the general sense. I think my landlord valued having a renter with stable income from one of their former employers, so that might explain the lack of an increase.
timdaub 5y ago
I live in Berlin Germany. I've been manually tracking all my grocery costs over 2 years now in an Google Spreadsheet. I'm a single person and I buy organic food. I work from home and I don't eat a lot outside. I cook probably on average 1.5 times a day. My general monthly bill on food is 600€. My methodology has been this: - I pay all my groceries with my debit card - Then, to get the cost for a month; I take all debit card entries in my online banking and sum them up - I then compare the finding to older findings. Last time I checked, the costs of my groceries hasn't gone up. So far, it has never gone up in any significant form over the last two years. Maybe by 5% but by no means +50% like the parent post suggests. I sometimes also get anxious about "inflation" when the cashier quotes an unexpected price. And it's why I've started double checking my intuition with the above-outlined process. Indeed, some times the shopping ends up more expensive as e.g. I bought an extra pack of coffee or meat.
- jacobr1 5y ago
  You would also need to consider if you changed any purchase habits. If you comparison shop, or focus on buying whatever cut of meat is on sale, or similar, then you might actually be buying a different distribution of items.
  - timdaub 5y ago
    Actually, I probably only buy meat every second week. And I've been consistently going to the same shop.
- pengaru 5y ago
  Your method doesn't control for shrinkflation[0] if only looking at your debit card statements. [0] https://www.mouseprint.org/category/downsiz/ https://www.mouseprint.org/category/downsiz/ Edit: Humans aren't robots folks, if there's consistently some excess food being disposed of it could simply mean there's slightly less going into the wastebin. And regarding TP, I don't know about you, but I tend to be wasteful with TP when the roll is fresh and increasingly frugal as the roll approaches empty. This is all highly subjective but the fact is people tend to be inconsistent and wasteful. You need to track normalized unit costs for such data to be reliable. Package sizes are constantly being manipulated, period.
boc 5y ago
The BLS has a very well-documented method [1] of measuring core consumer inflation. The basket of goods they track likely does not reflect your personal consumption patterns. [1] https://www.bls.gov/opub/hom/cpi/ https://www.bls.gov/opub/hom/cpi/
- msandford 5y ago
  Core inflation excludes food and energy. So as long as you're dead, you only experience core inflation! Everyone else who is alive is exposed to core inflation and also the one that takes food and fuel into account. Perhaps that's why people don't "buy" the numbers. Because the numbers aren't representative of the reality that alive human beings experience.
  - dragontamer 5y ago
    Core inflation is a different measure because food and gasoline prices vary so much. Its not about withholding information. Its about aggregating the important bits together. With a 60% rise in gasoline prices in the past year, it makes sense why you'd want to track gasoline separately from everything else. ------- If you want to just track "everything", then quote "CPI", not "core CPI" (a different number entirely).
  - jdavis703 5y ago
    I don’t drive, I’m mostly on a plant-based diet, and I’ve been on 100% renewable energy for years. I’m very much alive, and also am willing to believe we’re not close to double digit inflation based on my costs. And I live in one of those high-priced metros, so I actually experienced a rent cut since everyone fled to Miami and Austin (thereby increasing prices there). Obviously your experience may be different, but remember econometrics tracks the entire economy, not just your budget.
    - vntok 5y ago
      > I’m mostly on a plant-based diet, and I’ve been on 100% renewable energy for years Do you believe that your way of living is representative of the average American's?
JohnJamesRambo 5y ago
You should look into how they calculate the numbers haha, it’s comical. They send letters to homeowners and ask them “How much do you think you could rent your house for?” There’s no need for this idiocy I’m sure one of you could scrape the Zillow website in an afternoon and come up with something better.
- LeifCarrotson 5y ago
  It would be very easy to scrape Zillow in 2021, sure. But it would have been very difficult to do so in 1970!
  - wonderwonder 5y ago
    sure but they could easily scrape Zillow in 2020 and compare the numbers to 2021. Those numbers would show a ~17% increase. If they are unable to adapt their model to modern data sets then the model is pretty much useless. Edit: General response to the responses. I am not advocating for Zillow to be a source of truth, I was responding to the parent comment of my post and their mention of Zillow. What I am saying is that we are not limited to using methodologies of the past, there are vast datasets and modern data collection methods available to us now that can be used.
    - Rebelgecko 5y ago
      Considering the financial issues Zillow is experiencing, I'm not sure that it makes sense to trust their pricing models. Zillow and Opendoor bouncing off of each other has given some neighborhoods the real estate equivalent of Amazon's book about flies that was algorithmically priced at $24 million (https://www.wired.com/2011/04/amazon-flies-24-million/ https://www.wired.com/2011/04/amazon-flies-24-million/)
      - Supermancho 5y ago
        > I'm not sure that it makes sense to trust their pricing models. Zillow, Redfin, etc list at prices that may be inflated, but they always list the purchased pricing as far back as they can and raise estimate to last sale if higher.
dionian 5y ago
Kind of like the unemployment figure...
hobo_mark 5y ago
I remember reading somewhere that only accounts for new contracts. Rents usually only increase when negotiating new leases or extending existing ones close to expiration. So the majority of renters are not paying that much more.
TheCoelacanth 5y ago
What apartments list for is not the same as what people are actually paying for housing.
- wonderwonder 5y ago
  https://www.apartmentlist.com/research/rent-estimate-methodology https://www.apartmentlist.com/research/rent-estimate-methodo...
  - nzealand 5y ago
    > we estimate the expected price change that a rental unit should experience if it were to be leased today. CPI's Rent of Primary Residence measures what all people pay. Your website measures what you would have to pay if you were to rent today. Rental contracts are sticky.
evergrande 5y ago
This is in part because they changed how CPI is calculated in the 80s and 90s, which, as luck would have it, lowered the rates. You can see what CPI looks like with the older formulas here to compare: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
- mikeyouse 5y ago
  Shadowstats is one of the dumbest websites on the internet. It doesn't remotely compare to the older formulas, it just applies a random consistent number to US stats and says "They're undercounting!". If they really "recalculated" it wouldn't be a mirror of the official numbers. Think about it logically, per their dumb chart, inflation has averaged ~10% since 2000? and something like 7% in the 1990s? That easily gets you to over 1,000% total inflation in the past 30 years. Are you paying 10x for anything compared to the 1990s? TVs? Computers? Food? Gas? Furniture? Cars?
  - evergrande 5y ago
    Look at healthcare, college, housing, childcare, equities. Also look at shrinkflation: https://www.reddit.com/r/shrinkflation/ https://www.reddit.com/r/shrinkflation/ Also look at ingredient swaps in food, like HFCS. Also look at products that have swapped in cheaper materials. Also look at artificially cheap labor.
    - mikeyouse 5y ago
      Even in the most expensive cities in the US, rents are "only" up something like 250% in the past 30 years. And in most of the country, it's a small percentage of that. https://paragonpublic.blob.core.windows.net/dash-v2-blog-images/185973/sf_avg-asking-rents_by-year-b.jpg https://paragonpublic.blob.core.windows.net/dash-v2-blog-ima... Childcare's up by maybe 100%? Tuition maybe 150%? Not even sure what to do with equities.. they're a financial instrument not a good or service..
    - throw0101a 5y ago
      > equities The "C" in CPI stands from consumer, not assets. It is a measure of the cost of goods and services that people consume. Assets are not consumed so therefore not in the CPI. > Also look at shrinkflation Contrary to popular opinion, the people who calculate the CPI are not complete morons. See StatCan's (who do the CPI in Canada) handbook: > 7.10 Quantity adjustment entails accounting for changes in the quantity (e.g. package size, number of tissue ply, etc.) of observed POs. This is another implicit method of quality adjustment because it is assumed that the quality per standardized unit is the same over time. > 7.11 Quantity adjustment is the default treatment for nearly all of the POs in the food major aggregate as well as some of the products in the household operations, and personal care supplies and equipment aggregates. * https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-7-eng.htm https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-7-... * https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019001-eng.pdf?st=u4hD3LSL https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019... * https://www150.statcan.gc.ca/n1/en/catalogue/62-553-X https://www150.statcan.gc.ca/n1/en/catalogue/62-553-X The boffins are aware of shrinkflation (and good substitution, which is mentioned in (IIRC) Chapter 9).
thehumanmeat 5y ago
It's because they measure the item to an equivalent item from 1970. Take a car for example. Modern cars have various electronic contraptions that didn't exist in cars in 1970. A car today will have electronic control of windows, rather than the mechanical control from 1970. So, the BLS considers inflation by replacing a modern car's electronic control of windows and replaces it with what you can buy with a mechanical window today. It does this for all parts of the modern car to make it an equivalent product of 1970. Only when all parts are equal, they will calculate inflation. It is an incredibly flawed metric.
- deleted 5y ago
  [deleted]
- jonnycomputer 5y ago
  Its also just a gnarly problem to solve. PCE might be the better measure.
  - Canada 5y ago
    Yes, I thought that CPI series were bullshit and to prove it I decided to start looking at ads in newspapers from many decades in the past. I thought that while technology has advanced, some things are the same as we've always had so I could just compare real advertised prices over the years. Turns out that is not the case. Somehow a quality men's overcoat used be comperable in cost to a piece of land on the west coast that is now worth tens of millions of dollars ( and has been for decades now) When you consider where that coat came from then and what it took to get it to where it was offered vs what the practical value of that land was at that location and time... trying to compare prices of things over 50 years is like trying to compare the minutia of two different worlds you don't understand. It's impossible to cleanly bucket like for like over time when the price depends so much on "this level of thing, at this place and at this time" just as it's impossible to centrally replace the "invisible hand" in setting prices now. It's super complex to reverse engineer in hindsight why the relative prices of things were as they were at some point in the past. Not saying that government stats don't cheat. I think they do because they have motive to do so. But I fully agree that the task of creating a useful price index over a long period of time, even a short few decades, is far from a simple problem. Anyone who doesn't agree: please go try to make one.
jacobr1 5y ago
I'm not sure if this is the case with these data sets, but one common difference that causes confusion are current advertised rates vs total inventory. It could both be true that apartments on the market cost 17% more, but all rents (including those not marketed or not renewing) are only up 3.8. Another methodological difference might be mix of goods. For example, you probably can afford to pay 150/grocery-visit, but someone else might have just cut their meat intake, or switch to cheaper cuts, or have otherwise substituted such that maybe they pay $120. If you measure by the visit, or gross store receipts then the numbers will seem lower than they would comparing the same exact goods.
bryanlarsen 5y ago
You're noticing what's gone up. I just did a Home Depot run and everything there was the same price it was last year. A 7% inflation rate is not everything going up 7%, it's a small number of things going up a lot. The human mind is a lot better at noticing things that change rather than things that don't, so inflation always seems larger than it is.
- MrPowers 5y ago
  There was a lumber mania (https://news.ycombinator.com/item?id=27036557 https://news.ycombinator.com/item?id=27036557) followed by a lumber crash (https://news.ycombinator.com/item?id=28547202 https://news.ycombinator.com/item?id=28547202). Prices of Home Depot runs fluctuated massively for certain baskets of goods in 2021, like never before.
- wonderwonder 5y ago
  Lumber appears to be up ~21% year over year. https://www.statista.com/statistics/1239728/monthly-lumber-price-usa/ https://www.statista.com/statistics/1239728/monthly-lumber-p...
  - seoaeu 5y ago
    But based on that graph, the price has actually be higher than it is currently even before the pandemic
- Supermancho 5y ago
  > I just did a Home Depot run and everything there was the same price it was last year. > https://news.yahoo.com/home-depot-q-1-sales-and-profits-lifted-by-skyrocketing-inflation-182424800.html https://news.yahoo.com/home-depot-q-1-sales-and-profits-lift... I will posit that you're only noticing what's not gone up.
- cwkoss 5y ago
  Is wood back to pre pandemic prices?
lkrubner 5y ago
"Anyone with a web browser knows that home prices have experienced a monumental increase." An asset cannot experience inflation. The word inflation suggests something that loses values. A home that gains in value is clearly not suffering inflation, rather, that is the opposite of inflation. If you earn $200k a year, and there is 5% consumer inflation, and a year later you still make $200k, then in a sense you are 5% poorer. If you've a house worth 200k and its value goes up 5%, then a year later you are 5% wealthier. We might joking and informally refer to "asset inflation" but please remember, under any formal model, there is no such thing; it would be a contradiction in terms.
- vntok 5y ago
  > If you've a house worth 200k and its value goes up 5%, then a year later you are 5% wealthier. Not if everything else you might want and/or need to buy went up by 15%.
  - missedthecue 5y ago
    In that case, asset prices didn't 'inflate' anyway, therefore parents point still holds true.
- xibalba 5y ago
  But housing costs money. If you're a homeowner, if you bought a house for $250k in 2019 vs. a homeowner who bought an identical house for $300k in 2021, its pretty hard to argue the second homeowner isn't comparatively worse off. Of course, houses have to be maintained. At least where I am, the cost of plumbers, electricians, HVAC, etc. have exploded in the last 18 months. Renters are a much more straightforward case. The costs of housing (i.e. the costs of purchasing and maintaining the asset) are passed on to them in the form of rent increases.
  - lkrubner 5y ago
    While your concerns are valid, that is simply not the definition of consumer inflation. Houses are not consumer goods, they are assets, like stocks on the stock market. If the stock market goes up 2%, we do not make a habit of saying "Terrible news today, the stock market suffered 2% inflation."
teeray 5y ago
The way inflation is measured is imperfect, but provides a consistent indicator. You may have more or less exposure to inflation which determines someone’s actual spending power
throw0101a 5y ago
> How is housing up only 3.8%? Define "housing". When it comes to shelter, that is taken into account. > Anyone with a web browser knows that home prices have experienced a monumental increase. Because the "C" in CPI stands for consumer. Home prices reflect asset prices. They are not counted in the CPI just like stock and bond prices are not counted: these are all asset classes. > House prices are an interesting case. Houses are considered capital investment by the [US] BLS. So, when the value of your home increases that's a good thing as you didn't consume the house. In other words, you don't need to replace the house. Consumption goods are different in that you need to replace the thing you bought. Inflation is very bad for consumption goods because it costs you more to replace that thing each time you need it (food, for instance). * https://www.pragcap.com/forum/topic/assflation/#postid-2165 https://www.pragcap.com/forum/topic/assflation/#postid-2165 > The BLS views housing as a mostly “investment” item as opposed to a consumption item. So, for instance, when you consume a hot dog and have to replace it then the cost of replacement is a direct reflection on your well-being. A $1 hot dog that costs $2 one year later is a material change in living standards, all else equal, since the hot dog is an asset that you literally consume. A house is much more complex. [...] > > Of course, anyone who owns a house knows that it’s not that simple. You do basically consume your house over time. For instance, my home has appreciated substantially since I purchased it just 5 years ago and underwent a hellish remodel. At that time the cost of replacement was roughly $300 per square foot. But in the ensuing years the cost of replacement has increased to $400 per square foot. As my physical home falls apart over the years I will need to replace it. But the key point is that, as I replace these components the housing market is likely to revalue the total home value to account for this investment. So even though I am consuming my house over time I am very likely to recoup those costs. * https://www.pragcap.com/should-house-prices-be-in-the-cpi/ https://www.pragcap.com/should-house-prices-be-in-the-cpi/
- ako 5y ago
  Housing prices have only gone up for people that have purchased a new house this year. For people already living in a house, mortgage payments have mostly been stable, or possible even lower, when refinancing for a lower rate. So i can imagine that the average housing costs have only gone up 3.8%.
pacomerh 5y ago
I also make trips to the store to buy proteins, maybe just not your kind of proteins. I usually get chickpeas, beans, edamame, lentils, etc) and I haven't noticed a change in price.
- Turing_Machine 5y ago
  Soybeans are selling for $12.68/bushel today, compared to $11.53/bushel on December 10, 2020. So, yeah, they've gone up. They have come down somewhat from their peak earlier in the year (though still significantly more than they were a year ago). In May they were over $16/bushel. Lentils have just about doubled in price. $18.20/hundredweight in December '20, $36.20/hundredweight today.
fuzzfactor 5y ago
Well a $5 footlong at Subway is on sale for $5.99 until the end of the month. With coupon of course. After that who can say?
bufferoverflow 5y ago
I bought a house 9 months ago, Zillow's estimate on it is already 11% up.

gangaputra 5y ago

Lots of good replies here. One other thing to be conscious of is that inflation expectations play a large role in determining how actual inflation will pan out, so to raise the alarm on it in earnest is to the play a very dangerous game.

mitigating 5y ago

That site only does apartments for rent not purchased condos or houses right?

wonderwonder 5y ago
Perhaps but even if that is the case, the general consensus appears to be that home purchase prices increased ~17 - 19% over the last year so right in line with the estimate by this site. If anything it would drag the estimate upwards.
- Rebelgecko 5y ago
  OTOH, low interest rates have balanced that out, and let people who already have mortgages lower their monthly payment drastically. I wonder if monthly payment is perhaps a better metric than purchase price? At least for me, that's what actually determined how much home I'd be able to buy.

kahrl 5y ago

Seriously. This is such nonsense. Housing prices have risen 19% year over year.

seventytwo 5y ago
Housing prices are affected by more factors than just inflation…
whimsicalism 5y ago
My rent is down hundreds of dollars year over year as is it for most people I know.
- bluetwo 5y ago
  What city?
  - whimsicalism 5y ago
    San Francisco? https://www.zumper.com/rent-research/san-francisco-ca https://www.zumper.com/rent-research/san-francisco-ca
- Supermancho 5y ago
  > My rent is down hundreds of dollars year over year as is it for most people I know. What static US locations are "the people you know" living in? OFC you can get cheaper rent moving to more remote and primitive housing, but that's a misrepresentation anyway. From California, to Seattle, to the midwest, all rents have increased at least every other year. Your statement is literally unbelievable.
  - orhmeh09 5y ago
    Mine in Seattle has not, even if I believe you in the general sense. I think my landlord valued having a renter with stable income from one of their former employers, so that might explain the lack of an increase.

timdaub 5y ago

I live in Berlin Germany. I've been manually tracking all my grocery costs over 2 years now in an Google Spreadsheet. I'm a single person and I buy organic food. I work from home and I don't eat a lot outside. I cook probably on average 1.5 times a day. My general monthly bill on food is 600€. My methodology has been this: - I pay all my groceries with my debit card - Then, to get the cost for a month; I take all debit card entries in my online banking and sum them up - I then compare the finding to older findings. Last time I checked, the costs of my groceries hasn't gone up. So far, it has never gone up in any significant form over the last two years. Maybe by 5% but by no means +50% like the parent post suggests. I sometimes also get anxious about "inflation" when the cashier quotes an unexpected price. And it's why I've started double checking my intuition with the above-outlined process. Indeed, some times the shopping ends up more expensive as e.g. I bought an extra pack of coffee or meat.

jacobr1 5y ago
You would also need to consider if you changed any purchase habits. If you comparison shop, or focus on buying whatever cut of meat is on sale, or similar, then you might actually be buying a different distribution of items.
- timdaub 5y ago
  Actually, I probably only buy meat every second week. And I've been consistently going to the same shop.
pengaru 5y ago
Your method doesn't control for shrinkflation[0] if only looking at your debit card statements. [0] https://www.mouseprint.org/category/downsiz/ https://www.mouseprint.org/category/downsiz/ Edit: Humans aren't robots folks, if there's consistently some excess food being disposed of it could simply mean there's slightly less going into the wastebin. And regarding TP, I don't know about you, but I tend to be wasteful with TP when the roll is fresh and increasingly frugal as the roll approaches empty. This is all highly subjective but the fact is people tend to be inconsistent and wasteful. You need to track normalized unit costs for such data to be reliable. Package sizes are constantly being manipulated, period.

boc 5y ago

The BLS has a very well-documented method [1] of measuring core consumer inflation. The basket of goods they track likely does not reflect your personal consumption patterns. [1] https://www.bls.gov/opub/hom/cpi/ https://www.bls.gov/opub/hom/cpi/

msandford 5y ago
Core inflation excludes food and energy. So as long as you're dead, you only experience core inflation! Everyone else who is alive is exposed to core inflation and also the one that takes food and fuel into account. Perhaps that's why people don't "buy" the numbers. Because the numbers aren't representative of the reality that alive human beings experience.
- dragontamer 5y ago
  Core inflation is a different measure because food and gasoline prices vary so much. Its not about withholding information. Its about aggregating the important bits together. With a 60% rise in gasoline prices in the past year, it makes sense why you'd want to track gasoline separately from everything else. ------- If you want to just track "everything", then quote "CPI", not "core CPI" (a different number entirely).
- jdavis703 5y ago
  I don’t drive, I’m mostly on a plant-based diet, and I’ve been on 100% renewable energy for years. I’m very much alive, and also am willing to believe we’re not close to double digit inflation based on my costs. And I live in one of those high-priced metros, so I actually experienced a rent cut since everyone fled to Miami and Austin (thereby increasing prices there). Obviously your experience may be different, but remember econometrics tracks the entire economy, not just your budget.
  - vntok 5y ago
    > I’m mostly on a plant-based diet, and I’ve been on 100% renewable energy for years Do you believe that your way of living is representative of the average American's?

JohnJamesRambo 5y ago

You should look into how they calculate the numbers haha, it’s comical. They send letters to homeowners and ask them “How much do you think you could rent your house for?” There’s no need for this idiocy I’m sure one of you could scrape the Zillow website in an afternoon and come up with something better.

LeifCarrotson 5y ago
It would be very easy to scrape Zillow in 2021, sure. But it would have been very difficult to do so in 1970!
- wonderwonder 5y ago
  sure but they could easily scrape Zillow in 2020 and compare the numbers to 2021. Those numbers would show a ~17% increase. If they are unable to adapt their model to modern data sets then the model is pretty much useless. Edit: General response to the responses. I am not advocating for Zillow to be a source of truth, I was responding to the parent comment of my post and their mention of Zillow. What I am saying is that we are not limited to using methodologies of the past, there are vast datasets and modern data collection methods available to us now that can be used.
  - Rebelgecko 5y ago
    Considering the financial issues Zillow is experiencing, I'm not sure that it makes sense to trust their pricing models. Zillow and Opendoor bouncing off of each other has given some neighborhoods the real estate equivalent of Amazon's book about flies that was algorithmically priced at $24 million (https://www.wired.com/2011/04/amazon-flies-24-million/ https://www.wired.com/2011/04/amazon-flies-24-million/)
    - Supermancho 5y ago
      > I'm not sure that it makes sense to trust their pricing models. Zillow, Redfin, etc list at prices that may be inflated, but they always list the purchased pricing as far back as they can and raise estimate to last sale if higher.

dionian 5y ago

Kind of like the unemployment figure...

hobo_mark 5y ago

I remember reading somewhere that only accounts for new contracts. Rents usually only increase when negotiating new leases or extending existing ones close to expiration. So the majority of renters are not paying that much more.

TheCoelacanth 5y ago

What apartments list for is not the same as what people are actually paying for housing.

wonderwonder 5y ago
https://www.apartmentlist.com/research/rent-estimate-methodology https://www.apartmentlist.com/research/rent-estimate-methodo...
- nzealand 5y ago
  > we estimate the expected price change that a rental unit should experience if it were to be leased today. CPI's Rent of Primary Residence measures what all people pay. Your website measures what you would have to pay if you were to rent today. Rental contracts are sticky.

evergrande 5y ago

This is in part because they changed how CPI is calculated in the 80s and 90s, which, as luck would have it, lowered the rates. You can see what CPI looks like with the older formulas here to compare: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts

mikeyouse 5y ago
Shadowstats is one of the dumbest websites on the internet. It doesn't remotely compare to the older formulas, it just applies a random consistent number to US stats and says "They're undercounting!". If they really "recalculated" it wouldn't be a mirror of the official numbers. Think about it logically, per their dumb chart, inflation has averaged ~10% since 2000? and something like 7% in the 1990s? That easily gets you to over 1,000% total inflation in the past 30 years. Are you paying 10x for anything compared to the 1990s? TVs? Computers? Food? Gas? Furniture? Cars?
- evergrande 5y ago
  Look at healthcare, college, housing, childcare, equities. Also look at shrinkflation: https://www.reddit.com/r/shrinkflation/ https://www.reddit.com/r/shrinkflation/ Also look at ingredient swaps in food, like HFCS. Also look at products that have swapped in cheaper materials. Also look at artificially cheap labor.
  - mikeyouse 5y ago
    Even in the most expensive cities in the US, rents are "only" up something like 250% in the past 30 years. And in most of the country, it's a small percentage of that. https://paragonpublic.blob.core.windows.net/dash-v2-blog-images/185973/sf_avg-asking-rents_by-year-b.jpg https://paragonpublic.blob.core.windows.net/dash-v2-blog-ima... Childcare's up by maybe 100%? Tuition maybe 150%? Not even sure what to do with equities.. they're a financial instrument not a good or service..
  - throw0101a 5y ago
    > equities The "C" in CPI stands from consumer, not assets. It is a measure of the cost of goods and services that people consume. Assets are not consumed so therefore not in the CPI. > Also look at shrinkflation Contrary to popular opinion, the people who calculate the CPI are not complete morons. See StatCan's (who do the CPI in Canada) handbook: > 7.10 Quantity adjustment entails accounting for changes in the quantity (e.g. package size, number of tissue ply, etc.) of observed POs. This is another implicit method of quality adjustment because it is assumed that the quality per standardized unit is the same over time. > 7.11 Quantity adjustment is the default treatment for nearly all of the POs in the food major aggregate as well as some of the products in the household operations, and personal care supplies and equipment aggregates. * https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-7-eng.htm https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-7-... * https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019001-eng.pdf?st=u4hD3LSL https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019... * https://www150.statcan.gc.ca/n1/en/catalogue/62-553-X https://www150.statcan.gc.ca/n1/en/catalogue/62-553-X The boffins are aware of shrinkflation (and good substitution, which is mentioned in (IIRC) Chapter 9).

thehumanmeat 5y ago

It's because they measure the item to an equivalent item from 1970. Take a car for example. Modern cars have various electronic contraptions that didn't exist in cars in 1970. A car today will have electronic control of windows, rather than the mechanical control from 1970. So, the BLS considers inflation by replacing a modern car's electronic control of windows and replaces it with what you can buy with a mechanical window today. It does this for all parts of the modern car to make it an equivalent product of 1970. Only when all parts are equal, they will calculate inflation. It is an incredibly flawed metric.

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jonnycomputer 5y ago
Its also just a gnarly problem to solve. PCE might be the better measure.
- Canada 5y ago
  Yes, I thought that CPI series were bullshit and to prove it I decided to start looking at ads in newspapers from many decades in the past. I thought that while technology has advanced, some things are the same as we've always had so I could just compare real advertised prices over the years. Turns out that is not the case. Somehow a quality men's overcoat used be comperable in cost to a piece of land on the west coast that is now worth tens of millions of dollars ( and has been for decades now) When you consider where that coat came from then and what it took to get it to where it was offered vs what the practical value of that land was at that location and time... trying to compare prices of things over 50 years is like trying to compare the minutia of two different worlds you don't understand. It's impossible to cleanly bucket like for like over time when the price depends so much on "this level of thing, at this place and at this time" just as it's impossible to centrally replace the "invisible hand" in setting prices now. It's super complex to reverse engineer in hindsight why the relative prices of things were as they were at some point in the past. Not saying that government stats don't cheat. I think they do because they have motive to do so. But I fully agree that the task of creating a useful price index over a long period of time, even a short few decades, is far from a simple problem. Anyone who doesn't agree: please go try to make one.

jacobr1 5y ago

I'm not sure if this is the case with these data sets, but one common difference that causes confusion are current advertised rates vs total inventory. It could both be true that apartments on the market cost 17% more, but all rents (including those not marketed or not renewing) are only up 3.8. Another methodological difference might be mix of goods. For example, you probably can afford to pay 150/grocery-visit, but someone else might have just cut their meat intake, or switch to cheaper cuts, or have otherwise substituted such that maybe they pay $120. If you measure by the visit, or gross store receipts then the numbers will seem lower than they would comparing the same exact goods.

bryanlarsen 5y ago

You're noticing what's gone up. I just did a Home Depot run and everything there was the same price it was last year. A 7% inflation rate is not everything going up 7%, it's a small number of things going up a lot. The human mind is a lot better at noticing things that change rather than things that don't, so inflation always seems larger than it is.

MrPowers 5y ago
There was a lumber mania (https://news.ycombinator.com/item?id=27036557 https://news.ycombinator.com/item?id=27036557) followed by a lumber crash (https://news.ycombinator.com/item?id=28547202 https://news.ycombinator.com/item?id=28547202). Prices of Home Depot runs fluctuated massively for certain baskets of goods in 2021, like never before.
wonderwonder 5y ago
Lumber appears to be up ~21% year over year. https://www.statista.com/statistics/1239728/monthly-lumber-price-usa/ https://www.statista.com/statistics/1239728/monthly-lumber-p...
- seoaeu 5y ago
  But based on that graph, the price has actually be higher than it is currently even before the pandemic
Supermancho 5y ago
> I just did a Home Depot run and everything there was the same price it was last year. > https://news.yahoo.com/home-depot-q-1-sales-and-profits-lifted-by-skyrocketing-inflation-182424800.html https://news.yahoo.com/home-depot-q-1-sales-and-profits-lift... I will posit that you're only noticing what's not gone up.
cwkoss 5y ago
Is wood back to pre pandemic prices?

lkrubner 5y ago

"Anyone with a web browser knows that home prices have experienced a monumental increase." An asset cannot experience inflation. The word inflation suggests something that loses values. A home that gains in value is clearly not suffering inflation, rather, that is the opposite of inflation. If you earn $200k a year, and there is 5% consumer inflation, and a year later you still make $200k, then in a sense you are 5% poorer. If you've a house worth 200k and its value goes up 5%, then a year later you are 5% wealthier. We might joking and informally refer to "asset inflation" but please remember, under any formal model, there is no such thing; it would be a contradiction in terms.

vntok 5y ago
> If you've a house worth 200k and its value goes up 5%, then a year later you are 5% wealthier. Not if everything else you might want and/or need to buy went up by 15%.
- missedthecue 5y ago
  In that case, asset prices didn't 'inflate' anyway, therefore parents point still holds true.
xibalba 5y ago
But housing costs money. If you're a homeowner, if you bought a house for $250k in 2019 vs. a homeowner who bought an identical house for $300k in 2021, its pretty hard to argue the second homeowner isn't comparatively worse off. Of course, houses have to be maintained. At least where I am, the cost of plumbers, electricians, HVAC, etc. have exploded in the last 18 months. Renters are a much more straightforward case. The costs of housing (i.e. the costs of purchasing and maintaining the asset) are passed on to them in the form of rent increases.
- lkrubner 5y ago
  While your concerns are valid, that is simply not the definition of consumer inflation. Houses are not consumer goods, they are assets, like stocks on the stock market. If the stock market goes up 2%, we do not make a habit of saying "Terrible news today, the stock market suffered 2% inflation."

teeray 5y ago

The way inflation is measured is imperfect, but provides a consistent indicator. You may have more or less exposure to inflation which determines someone’s actual spending power

throw0101a 5y ago

> How is housing up only 3.8%? Define "housing". When it comes to shelter, that is taken into account. > Anyone with a web browser knows that home prices have experienced a monumental increase. Because the "C" in CPI stands for consumer. Home prices reflect asset prices. They are not counted in the CPI just like stock and bond prices are not counted: these are all asset classes. > House prices are an interesting case. Houses are considered capital investment by the [US] BLS. So, when the value of your home increases that's a good thing as you didn't consume the house. In other words, you don't need to replace the house. Consumption goods are different in that you need to replace the thing you bought. Inflation is very bad for consumption goods because it costs you more to replace that thing each time you need it (food, for instance). * https://www.pragcap.com/forum/topic/assflation/#postid-2165 https://www.pragcap.com/forum/topic/assflation/#postid-2165 > The BLS views housing as a mostly “investment” item as opposed to a consumption item. So, for instance, when you consume a hot dog and have to replace it then the cost of replacement is a direct reflection on your well-being. A $1 hot dog that costs $2 one year later is a material change in living standards, all else equal, since the hot dog is an asset that you literally consume. A house is much more complex. [...] > > Of course, anyone who owns a house knows that it’s not that simple. You do basically consume your house over time. For instance, my home has appreciated substantially since I purchased it just 5 years ago and underwent a hellish remodel. At that time the cost of replacement was roughly $300 per square foot. But in the ensuing years the cost of replacement has increased to $400 per square foot. As my physical home falls apart over the years I will need to replace it. But the key point is that, as I replace these components the housing market is likely to revalue the total home value to account for this investment. So even though I am consuming my house over time I am very likely to recoup those costs. * https://www.pragcap.com/should-house-prices-be-in-the-cpi/ https://www.pragcap.com/should-house-prices-be-in-the-cpi/

ako 5y ago
Housing prices have only gone up for people that have purchased a new house this year. For people already living in a house, mortgage payments have mostly been stable, or possible even lower, when refinancing for a lower rate. So i can imagine that the average housing costs have only gone up 3.8%.

pacomerh 5y ago

I also make trips to the store to buy proteins, maybe just not your kind of proteins. I usually get chickpeas, beans, edamame, lentils, etc) and I haven't noticed a change in price.

Turing_Machine 5y ago
Soybeans are selling for $12.68/bushel today, compared to $11.53/bushel on December 10, 2020. So, yeah, they've gone up. They have come down somewhat from their peak earlier in the year (though still significantly more than they were a year ago). In May they were over $16/bushel. Lentils have just about doubled in price. $18.20/hundredweight in December '20, $36.20/hundredweight today.

fuzzfactor 5y ago

Well a $5 footlong at Subway is on sale for $5.99 until the end of the month. With coupon of course. After that who can say?

bufferoverflow 5y ago

I bought a house 9 months ago, Zillow's estimate on it is already 11% up.