Tasty Real Estate

various groups in the real estate industry are now objecting to the fact that the rent-equivalent number is included in the CPI. (they calculate housing inflation based on what you would rent your house for, and not what the overall price is. this has kept the inflation numbers artificially low over the last few years as house prices enjoyed their unprecedented appreciation). rent numbers are coming up, the CPI is starting to more accurately reflect what housing prices really are, and a lot of voices in the real estate industry are complaining about it, arguing that inflation numbers are being artificially pressured upwards, and that the fed should stop raising rates. they weren’t troubled by the rent equivalent calculation beforehand, when inflation was being understated by the same methodology. unfortunately, you can’t have it both ways. housing costs need to be accounted for somehow in inflation gauges, and many would argue that over the last few years they have not been accurately represented.

This entry was posted on Tuesday, June 20th, 2006 at 11:07 am by Eric and is filed under Market Conditions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.