Measures of housing cost

In another Facebook back and forth, friend  Mark asked about manipulation of chained CPI through the elasticity/substitution adjustments and whether they could be manipulated.  In response I brought up my favorite opaque contributor to CPI, “Owner-Adjusted Rent”.  I went to see if FRED could help me compare the CPI adjustment to housing prices and voila!

CPI owners’ Equivalent Rent vs. Case-Schiller 20 cities housing index

AS you can see, home prices move around a bit more than inflation has captured, thus our anecdotal experience of inflation, depending on the year we have to buy or sell a residence, or even sign a lease, can be very different from CPI.

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