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Old 12-28-2017, 08:15 AM
 
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Move to a mild climate and live in a tent.
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Old 12-28-2017, 08:36 AM
 
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Chained CPI automatically adjusts the market basket. They use it to keep down real food inflation. The housing inflation is measured through the internal surveys owner-equivalent rent. They asked the owners what they would charge themselves for rent so there's no incentive to give a real answer based on costs and what the market would bear. OER typically goes up about 3%. The FHFA's survey for housing prices usually rises about 6 percent, and the realtor's association survey has it at 7 percent.
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Old 12-28-2017, 08:57 AM
 
Location: Fairfax County, VA
1,387 posts, read 602,607 times
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Originally Posted by freemkt View Post
Maybe Congress should have read the bill before they passed it.
All that mattered in the end was passing something. It had sunk to being just a matter of saving partisan face.
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Old 12-28-2017, 09:03 AM
 
Location: Fairfax County, VA
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There are no valid complaints against Owner's Equivalent Rent. Everyone has adopted it. The last remaining whiners are those who cannot fathom the fact that home ownership involves both consumption and investment expenditures.

Meanwhile, the many who have no actual clue as to what the C-CPI-U is might want to go here...

Introducing the Chained CPI

Last edited by 17thAndK; 12-28-2017 at 09:11 AM..
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Old 12-28-2017, 09:48 AM
 
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No one uses OER. FHFA is a government agency. Private industry has their own market surveys. Real estate associations maintain their own surveys of home prices, rental prices, and rental costs. They can be found on the state association's web site and are usually published monthly for home sales or quarterly for rentals.

OER is a fake survey. They use the survey to equate ownership with rentals. By treating owner-occupied homes as rentals, they also make the assumption that costs are inclusive of utilities and real estate taxes. Rising costs in these areas are thus subtracted from the owner-equivalent rent to further suppress the rise.

Housing is not the only area in the consumer price survey where they've create an internal survey to avoid using market value prices.
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Old 12-28-2017, 10:40 AM
 
Location: Fairfax County, VA
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Poor substitutes for CPI and GDP data are a dime a dozen.
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Old 12-28-2017, 11:11 AM
 
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Those aren't substitutes for CPI, just a portion of the index that has a weighting of approximately 40 percent.

To accept the CPI and the claim that 2 percent inflation is being targeted by the Fed, you have to buy into the idea that it will take roughly 35 to 50 years for the cost of living to double (as 2% implies a 36-year floor). In essence, people who are entering the workforce today will be retired or nearing retirement by then. I don't know anyone gullible enough to believe that, yet people are stupid enough to defend the mathematical equivalent.
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Old 12-28-2017, 02:36 PM
 
Location: Fairfax County, VA
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Speaking of smart, the producers of the CPI and GDP tend to have pretty solid resumés. As the folks who developed the measure and treatment for OER (more than 30 years ago), I bet they were aware of a lot of stuff that would have gotten past most folks.
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Old 12-28-2017, 09:33 PM
 
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Originally Posted by 17thAndK View Post
Speaking of smart, the producers of the CPI and GDP tend to have pretty solid resumés.
Yep, sounds like someone is Pulling a Larry Caldwell (tm) here. They have a gut feeling that the conclusions reached by BLS/GOA/SSA/CBO/whoever are wrong, usually because it runs counter to their assumptions, so without having lifted a finger to actually do their own scientific analysis they just pronounce the results from these people who do this for a living as wrong.
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Old 12-28-2017, 10:55 PM
 
33,046 posts, read 20,731,344 times
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Quote:
Originally Posted by 17thAndK View Post
There are no valid complaints against Owner's Equivalent Rent. Everyone has adopted it. The last remaining whiners are those who cannot fathom the fact that home ownership involves both consumption and investment expenditures.

Meanwhile, the many who have no actual clue as to what the C-CPI-U is might want to go here...

Introducing the Chained CPI

Then why do renters get less value for their housing consumption? Or, why are homeowners enjoying 'free' housing consumption?

e.g. Renter A rents a house, pays $N dollars per month...Homeowner B owns an identical house next door to A (presumably similar value and similar consumption), and pays $0.5N per month. Is B effectively enjoying 'free' investment without investment expenditure as well?

p.s. You didn't address the OP question - what's the next lower housing chain below SRO?
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