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I'll let someone else comment on the data collection part. But for why this is necessary, how else would you compute the housing costs of someone who purchased

by seoaeu 5y ago

I'll let someone else comment on the data collection part. But for why this is necessary, how else would you compute the housing costs of someone who purchased a home 15 years ago and hasn't moved since? That number is needed to compute the overall CPI, so you can't just skip it

missedthecue 5y ago
Why can't you just skip it and calculate a median of all the nearby homes and rentals that have transacted on the market over the past x months? That seems more objective than asking people who have no idea what rent is what they'd rent their home for. I bet if you asked a panel of 1000 homeowners that haven't bought or rented in 10+ years what rent was going for in their cities, they'd undershoot it by 20% or more.
- seoaeu 5y ago
  To quote the BLS [0] on why home prices are the wrong metric: > the CPI views housing units as capital (or investment) goods and not as consumption items. Spending to purchase and improve houses and other housing units is investment and not consumption. Shelter, the service the housing units provide, is the relevant consumption item for the CPI. The cost of shelter for renter-occupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes. If I'm reading that fact sheet correctly, they actually don't ask homeowners at all. Rather they just ask a bunch of renters whet their monthly rent is (which the vast majority of them should be able to answer accurately) and then use fancy math to extrapolate what the nearby home ownership units would rent for. I'd suggest reading/skimming that whole fact sheet if you want more details, though the summary seems to be that they've actually put a bunch of thought into this stuff. [0]: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...

by seoaeu 5y ago

missedthecue 5y ago

Why can't you just skip it and calculate a median of all the nearby homes and rentals that have transacted on the market over the past x months? That seems more objective than asking people who have no idea what rent is what they'd rent their home for. I bet if you asked a panel of 1000 homeowners that haven't bought or rented in 10+ years what rent was going for in their cities, they'd undershoot it by 20% or more.

seoaeu 5y ago
To quote the BLS [0] on why home prices are the wrong metric: > the CPI views housing units as capital (or investment) goods and not as consumption items. Spending to purchase and improve houses and other housing units is investment and not consumption. Shelter, the service the housing units provide, is the relevant consumption item for the CPI. The cost of shelter for renter-occupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes. If I'm reading that fact sheet correctly, they actually don't ask homeowners at all. Rather they just ask a bunch of renters whet their monthly rent is (which the vast majority of them should be able to answer accurately) and then use fancy math to extrapolate what the nearby home ownership units would rent for. I'd suggest reading/skimming that whole fact sheet if you want more details, though the summary seems to be that they've actually put a bunch of thought into this stuff. [0]: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...