7 karma · joined March 14, 2021
Let’s say it has (my guess of my particular case) a 30% error. What happens to CPI if the weighted average of housing is off by 30%? Assuming housing is a third of CPI, that puts CPI up to 10%.
Look, I’m actually looking to buy a home out in the country and remote work from there. I’m actually living the problem of “should I sell my home or rent it out?” It’s not a survey question, that’s for sure!
It’s like asking what the position and momentum of particle is simultaneously. You can’t know the price of something you don’t intend to rent unless you rent it, but you’re not renting it because you have no intention of renting.
Even if you “pretend” to rent by putting out a fake add and then not signing the rental agreement, that doesn’t count. That only gives you the demand side of the price. Since you know that you don’t intend to actually rent your home, you will not give serious consideration the opportunity cost of renting out your home.
“If someone were to rent you home today, how much do you think it would rent for monthly[...]”
That’s a very poor proxy for housing cost.
First of all it’s a guess. A guess from whom? What do these oracles know about how much their home can rent for if they haven’t put it up?
Second, the homes available in the rental market are vastly inferior from (for example) my home. I cannot find a home remotely as nice as my home (bought in 2017 for 320k, currently valued for 400k - pretty average middle class home in my city) but I can’t rent mine for what I’d want to rent it for [1] - so the supply and demand price don’t overlap for my type of home in my city. Without overlap of price, the question, as it pertains to my home is meaningless.
On the other hand, there is an easy way to include housing price for owners. Add price of homes to the CPI. In fact, investments generally should be included, since they are goods whose price raise with the increase in monetary mass
[1] is the accelerated deterioration of my home, and the headache of being a landlord worth the $1400/month renting it to a family? No. Can I rent it for $1800 by splitting it into rooms, say, for students? $1800/month is not worth having destructive students live here.