There is a sleepy little town, not too far from me and the house everyone is suddenly selling their homes because others are willing to pay them up to $100,000 more than it's worth.. Not kidding! Such is the desire to leave the city areas and move to more rural areas..

Lynda

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by Wolf Richter • Mar 30, 2021 • 91 Comments
Dollar’s Purchasing Power Swoons, but CPI ignores house price inflation.
By Wolf Richter for WOLF STREET.

House prices rose by 11.2% from a year ago, the biggest increase since the peak of Housing Bubble 1 in 2006, according to today’s National Case-Shiller Home Price Index for January.

The index is a good measure of “house-price inflation” because it’s based on the “sales pairs” method, comparing the sales price of a house in the current month to the price of the same house when it sold previously, thereby tracking the amount of dollars it takes to buy the same house over time.

But house price inflation is not included in the Bureau of Labor Statistics’ Consumer Price Index. While about one-third of CPI is based on housing costs, it tracks rents exclusively, rather than home prices. Even the CPI for “Owner’s equivalent rent of residence,” which accounts for about 25% of CPI, is based on homeowners’ estimates about how much their house would rent for.