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Has any reporter ever used the correct term "House price inflation"?


By Patrick   Follow   Wed, 26 Dec 2012, 10:50am PST   833 views   16 comments
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Just wondering.

Reporters always recognize food, energy, and medical inflation as inflation, but are always utterly blind to the fact that house price inflation is also inflation.

Challenge: can anyone show me any reporter for a mainstream paper that has ever referred to house price inflation using the correct term: INFLATION.

Please write all mainstream reporters (Bloomberg, NY Times, Washington Post) and ask them to reply here.

Comments 1-16 of 16     Last »

Kevin   Wed, 26 Dec 2012, 11:09am PST   Share   Quote   Permalink   Like   Dislike     Comment 1

They wouldn't use that term because it's not accurate. You also wouldn't refer to increasing cost of gold or stocks as inflation.

Food, energy, and medical expenses aren't assets. When they cost more, you get nothing in return. When the price of a home goes up (and assuming that it stays up), the increase in price is retained.

*Housing* costs can certainly inflate though. This is usually the term used when talking about rent.

It's "housing" that's essential (and thus a target for inflation), not houses. Lots of things can be used for housing.

New Renter   Wed, 26 Dec 2012, 12:28pm PST   Share   Quote   Permalink   Like   Dislike     Comment 2

TKevin says

They wouldn't use that term because it's not accurate. You also wouldn't refer to increasing cost of gold or stocks as inflation.

Food, energy, and medical expenses aren't assets. When they cost more, you get nothing in return. When the price of a home goes up (and assuming that it stays up), the increase in price is retained.

*Housing* costs can certainly inflate though. This is usually the term used when talking about rent.

It's "housing" that's essential (and thus a target for inflation), not houses. Lots of things can be used for housing.

Whaf about durable goods, would higher prices for say a no-frills dryer or couch be considered inflation? Cars? Clothing? All of these would depreciate over time even if they were never used.

thomaswong.1986   Wed, 26 Dec 2012, 12:46pm PST   Share   Quote   Permalink   Like   Dislike     Comment 3

perhaps over valued would also be fair game.

as to Kevins comments.... expenditures like food, medical, gas and other can be overvalued compared to competitive compatible products.

But homes are equal expenditures, our Govt inflation index uses rent equivalent as a measure to check home price inflation.

Assets can also be equally over valued compared to when using basic fundamental analysis. But homes should not be considered an asset class, which it has over the past 12-14 yrs.

Anyway, Shiller has already proved RE prices track rate of inflation.

thomaswong.1986   Wed, 26 Dec 2012, 12:49pm PST   Share   Quote   Permalink   Like   Dislike     Comment 4

New Renter says

Clothing?

LOL! $100 jeans vs $30 jeans. The only difference is the $100 jeans makes your ass look better...

Patrick   Wed, 26 Dec 2012, 1:05pm PST   Share   Quote   Permalink   Like   Dislike     Comment 5

thomaswong.1986 says

Anyway, Shiller has already proved RE prices track rate of inflation.

Yes, good point, and that's because increasing house prices are exactly and only inflation.

Stocks are radically different from houses because stocks can by themselves grow and produce more, becoming intrinsically more valuable.

Houses never grow or produce more shelter than last year. They simply sit out in the rain and slowly rot.

Gold is also different in that it is not something you need to live, like housing, food, energy, and medical care. But gold is similar to housing in that any increase in its price defines a decrease in the value of cash. The gold does not change or get more valuable. It's just that cash gets less valuable with respect to gold.

The increase in the price of a house means the decrease in the purchasing power of cash and nothing else. They are perfectly opposite, making any increase in the price of a house the very definition of inflation.

Kevin   Wed, 26 Dec 2012, 1:18pm PST   Share   Quote   Permalink   Like   Dislike     Comment 6

It's not the house that increases in value, it's the land, but the land value is highly dependent on the house that sits on it. Just take a look at how value is assessed for an example (they pretty much always claim 50% value in land, 50% in improvements).

You don't need land to live at all.

Real estate is absolutely an asset. Just ask any landlord.

"Durable goods" are not investment-class assets. They have some resale value, but (barring antique status), it will always be less than the fair market value of a new version of the same.

Patrick says

But gold is similar to housing in that any increase in its price defines a decrease in the value of cash. The gold does not change or get more valuable. It's just that cash gets less valuable with respect to gold.

And yet the value of the cash remains constant relative to the cost of food and electricity.

Sorry, but I'm not seeing this. If prices increase uniformly, then, yes, there's inflation, the value of the cash has gone down. But if cash is only down relative to a single asset class, it's clearly that asset class that has increased in value, since that asset will also have gone up relative to any other asset class.

From 2001 to 2007 gold increased 131%. Housing increased 44%. CPI says 17% inflation.

Clearly two of these things can't be 'inflation' if any one of them is.

Schiller argues that housing will eventually match inflation in the long term, not that it 'tracks' inflation. If housing simply tracked inflation than housing prices never would have hit what they did. The 'long term' here is measured in decades, though, which means that you should definitely be treating houses as an asset class.

jvolstad   Wed, 26 Dec 2012, 1:23pm PST   Share   Quote   Permalink   Like   Dislike     Comment 7

Patrick, it's not a "house", it's a "home". Let's get those Realtard terms right. :-/

New Renter   Wed, 26 Dec 2012, 1:23pm PST   Share   Quote   Permalink   Like   Dislike     Comment 8

thomaswong.1986 says

New Renter says

Clothing?

LOL! $100 jeans vs $30 jeans. The only difference is the $100 jeans makes your ass look better...

Kind of like this $370k (zestimate) East Palo Alto house:
http://www.zillow.com/homedetails/1238-Westminster-Ave-East-Palo-Alto-CA-94303/15582364_zpid/

vs this $1.05M (zestimate) Menlo park house?:

http://www.zillow.com/homedetails/103-Chester-St-Menlo-Park-CA-94025/15583042_zpid/

Less than a mile apart as the crow flies, of a similar size, and proximity to big freeway but still worlds apart...

(Any $70 that makes your ass look better is money well spent!)

New Renter   Wed, 26 Dec 2012, 1:29pm PST   Share   Quote   Permalink   Like   Dislike     Comment 9

Kevin says

It's not the house that increases in value, it's the land, but the land value is highly dependent on the house that sits on it. Just take a look at how value is assessed for an example (they pretty much always claim 50% value in land, 50% in improvements).

Kevin says

real estate is absolutely an asset. Just ask any landlord.

Dryers can be rented too - ask any laundromat. Cars, clothes, furniture, all can be rented.

jvolstad   Wed, 26 Dec 2012, 1:30pm PST   Share   Quote   Permalink   Like   Dislike     Comment 10

New Renter says

Kind of like this $370k (zestimate) East Palo Alto house:
http://www.zillow.com/homedetails/1238-Westminster-Ave-East-Palo-Alto-CA-94303/15582364_zpid/

I've only been in the East Palo Alto area a couple times. Not an area that I would want to be in after dark.

http://www.zillow.com/homedetails/2376-Menalto-Ave-East-Palo-Alto-CA-94303/15582572_zpid/

$300K for this dump and it's pending? Amazing. In San Antonio this might sell for $50K on the East side of town.

New Renter   Wed, 26 Dec 2012, 1:32pm PST   Share   Quote   Permalink   Like   Dislike     Comment 11

jvolstad says

New Renter says

Kind of like this $370k (zestimate) East Palo Alto house:

http://www.zillow.com/homedetails/1238-Westminster-Ave-East-Palo-Alto-CA-94303/15582364_zpid/

I've only been in the East Palo Alto area a couple times. Not an area that I would want to be in after dark.

http://www.zillow.com/homedetails/2376-Menalto-Ave-East-Palo-Alto-CA-94303/15582572_zpid/

$300K for this dump and it's pending? Amazing. In San Antonio this might sell for $50K on the East side of town.

Welcome to the SFBA!

Kevin   Wed, 26 Dec 2012, 2:18pm PST   Share   Quote   Permalink   Like   Dislike     Comment 12

jvolstad says

Patrick, it's not a "house", it's a "home". Let's get those Realtard terms right. :-/

Houses are a type of home. So are apartments, trailers, and cardboard boxes.

When somebody says "home", they mean any of those things. The place where you live. "House" is a much more specific term.

New Renter says

Dryers can be rented too - ask any laundromat. Cars, clothes, furniture, all can be rented.

The dryer is an asset here, much like the house. It's a deprecating asset that only retains value as long as it is maintained (and has a definite shelf life). The land part of the house is the non-deprecating asset. There is no equivalent for the dryer. The laundromat itself is an asset -- it's a business (and, yes, land is a factor even if the property being rented is an apartment).

The dryer is not an investment-class asset though! The laundromat is.

jvolstad says

I've only been in the East Palo Alto area a couple times. Not an area that I would want to be in after dark.

Bah, I went to EPA on accident several times, at night, and I never got murdered. Granted this was only to shop at IKEA. Apparently murders have dropped by more than 90% since 2001. So that's something.

It's a real dump of a place, but around the edges it's being gentrified.

I wonder where the dishwashers are going to live if the whole place gets gentrified though. It's so weird to see houses that would be considered a pretty good deal in the midwest in the middle of silicon valley.

Honestly, though, if you don't have kids (because the schools are still shit), some of the newer developments there aren't bad deals by SV standards. I remember seeing 3bd townhouses listed for under $600k a few years back.

thomaswong.1986   Wed, 26 Dec 2012, 3:50pm PST   Share   Quote   Permalink   Like   Dislike     Comment 13

Patrick says

Stocks are radically different from houses because stocks can by themselves grow and produce more, becoming intrinsically more valuable.

Houses never grow or produce more shelter than last year. They simply sit out in the rain and slowly rot.

yes pretty much so... what has changed has been the public perception of their home...
a piggy bank! Ugh...

taxee   Wed, 26 Dec 2012, 9:22pm PST   Share   Quote   Permalink   Like   Dislike     Comment 14

It was 'exuberance'. Long live 'the maestro'.

taxee   Wed, 26 Dec 2012, 9:26pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 15

zzyzzx   Thu, 27 Dec 2012, 3:48am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 16

I'd like to see them use House price correction.

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