Monday, 16 October 2017

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Inflationeering…

Posted by
June 13, 2012
in Blog

To add some context to Devin Roundtree’s recent post, from Azizonomics:

As BusinessWeek asked way back in 2005 before the bubble burst:

Wondering why inflation figures are so tame when real estate prices are soaring? There is a simple explanation: the Consumer Price Index factors in rising rents, not rising home prices.

Are we really getting a true reading on inflation when home price appreciation isn’t added into the mix? I think not.

I find the idea that house price appreciation and depreciation is not factored into inflation figures stunning. For most people it’s their single biggest lifetime expenditure, and for many today mortgage payments are their single biggest monthly expenditure. And rental prices (which are substituted for house prices) are a bad proxy. While house prices have fallen far from their mid-00s peak, rents have continued to increase:

Statisticians in Britain are looking to plug the hole. From the BBC: …

Continue reading at Azizonomics…

image: flickr.com/vegaseddie