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> it assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent It's pricing the cost of shelter. Renting
by JumpCrisscross 5mo ago
> it assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent
It's pricing the cost of shelter. Renting a home is buying shelther. Buying a home is buying shelter and buying a financial asset. OER is the way you separate the last two components. Otherwise, you'd have to only look at rents to determine housing prices, which would be rubbish in a country where most households live in homes they own.
- jhallenworld 5mo agoSuppose you want shelter. It used to be that you could buy a house for a reasonable price and move in. But now that's unaffordable, so instead your have to pay rent. In CPI thinking these are equivalent forms of shelter, but I bet if you asked most Americans, they would not agree with you.
- JumpCrisscross 5mo ago> But now that's unaffordable Which flows through to owner-equivalent rent, in part. > In CPI thinking these are equivalent forms of shelter, but I bet if you asked most Americans, they would not agree with you It really doesn't. When measuring rent, you directly measure rent. For OER, you're measuring the housing price and imputing shelter cost from that. They're similar, but different. Sort of like how renting and owning are similar, but different. Also, given the variance in housing affordability across the country, you'd almost certainly have to strip out any financial-asset component anyway to meaningfully compare the resulting number.
- throwwwll 5mo ago>Renting is buying American education.