> Purchasing real estate is an investment, not a consumer expenditure.
Yeah I remember when I was living under a bridge and then decided to invest in Real Estate.
Renters have a greatly impaired ability to build wealth. If everyone has to rent except "investors" then there is no more middle class. In a market that is majority renters landlords can raise rent until it consumes virtually all surplus:
The CPI is correct as the CPI is defined, but that's circular. I can index inflation to the number of nose hairs in the President's nose if I want. The question is whether it's a meaningful statistic for driving a policy that benefits anyone except the government or the financial industry.
The CPI should include the cost per square foot of residential real estate. It should also be weighted heavily toward necessities like food, energy, education, and health care, which perhaps coincidentally are hard to outsource and therefore are more directly influenced by domestic inflation.
Nonsense. That's like claiming the CPI should include the price of gold bars or mutual fund shares. You completely missed the point of the CPI. It has nothing to do with building wealth.
CPI is heavily weighted toward necessities like food, energy, education, and health care. You would know that if you bothered to read the documentation.
> The CPI should include the cost per square foot of residential real estate.
Other websites follow that [0] and interestingly enough, median inflation adjusted price per square foot across the entire country hasn't really budged in decades although covid could have messed that up these pasts 2 years. Of course, if you want to live in a geography constrained location like the west coast and northeast, that does not really help you but you need to work with their local governments as that is a local problem and not a federal one.
If the purpose of buying real estate is to build wealth, then it is, by definition, an investment. If the purpose is to provide shelter, it is not.
In practice, people buy houses both as an investment and a shelter. So the CPI attempts to ignore the portion of the purpose that functions as an investment.
Yeah I remember when I was living under a bridge and then decided to invest in Real Estate.
Renters have a greatly impaired ability to build wealth. If everyone has to rent except "investors" then there is no more middle class. In a market that is majority renters landlords can raise rent until it consumes virtually all surplus:
https://en.wikipedia.org/wiki/Law_of_rent
The CPI is correct as the CPI is defined, but that's circular. I can index inflation to the number of nose hairs in the President's nose if I want. The question is whether it's a meaningful statistic for driving a policy that benefits anyone except the government or the financial industry.
The CPI should include the cost per square foot of residential real estate. It should also be weighted heavily toward necessities like food, energy, education, and health care, which perhaps coincidentally are hard to outsource and therefore are more directly influenced by domestic inflation.