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Author says "Actually, rents go up by the percentage of the inflation rate that's due to housing" while attempting to explain why SF rent control limits rent in
by spikels 11y ago
Author says "Actually, rents go up by the percentage of the inflation rate that's due to housing" while attempting to explain why SF rent control limits rent increases to 60% of CPI and not 100% of CPI as is always used.
LOL - That's not how inflation rate calculations work!
Suppose housing was 60% of the CPI index (it's actually around 32%) and it was up 10% last year and everything else - the remaining 40% - was up only 5% then overall CPI would be up 8% (=60%10%+405%) and this SF rent increases would be limited to 4.8% (=60%*8%). Note how 4.8% is lower than both the housing inflation and other inflation. This is because this is the (obviously) wrong way to use CPI.
The actual reason it is 60% of CPI is political and in Norah reflects a proper accounting of inflation.
Too bad our loudest political voices can't get either the facts or math right because both are required to solve our housing problems.