Housing costs are up 24% since January 220 () and what’s more is that only ~1/3 of individuals actually pay variable/floating housing costs through a rent. Homeowners pay 30yr fixed rate mortgages due to government genius in securitizing mortgages via Freddie Mac and Fannie Mae; sustaining a steady flow of capital for the housing market and assuring affordability and fixed payments for US householdsInflation is dead except housing is already 60% up compared to three years ago
Real wages are up -Wages are no where near +60% what they were three years ago; so in fact the average American is poorer when it comes to purchasing power.
Real wages looks to be unchanged from 2020 till now. However, the Big Mac seems to have beaten real wagesHousing costs are up 24% since January 220 () and what’s more is that only ~1/3 of individuals actually pay variable/floating housing costs through a rent. Homeowners pay 30yr fixed rate mortgages due to government genius in securitizing mortgages via Freddie Mac and Fannie Mae; sustaining a steady flow of capital for the housing market and assuring affordability and fixed payments for US households
Real wages are up -
CPI is not indicative of purchasing power since its allocation to shelter is via renting. When evaluating Americans' purchasing power you should be looking at the Housing Index: , which is up about 43%, or 50% when considering houses instead of apartments: . I threw in 60% because there's such a concept as desirable neighborhoods to live in.Housing costs are up 24% since January 220 () and what’s more is that only ~1/3 of individuals actually pay variable/floating housing costs through a rent. Homeowners pay 30yr fixed rate mortgages due to government genius in securitizing mortgages via Freddie Mac and Fannie Mae; sustaining a steady flow of capital for the housing market and assuring affordability and fixed payments for US households
Real wages are up -
But we have raspberries all year round nowCPI is not indicative of purchasing power since its allocation to shelter is via renting. When evaluating Americans' purchasing power you should be looking at the Housing Index: , which is up about 43%, or 50% when considering houses instead of apartments: . I threw in 60% because there's such a concept as desirable neighborhoods to live in.
Real wages are up only slightly since 2020, but the most expensive purchases people will ever make - real estate - have out stripped it by an order of magnitude while not being counted in CPI. Net result = reduction in effective purchasing power. Only when you totally ignore home purchases can you arrive at a conclusion like "Americans are better off than before."
And yes, I know 65% of Americans already own "a home," but that doesn't mean they like the home they live in. It's like saying I own a car already so car prices don't affect me.
No. Retail sales are flat on a MoM basis and up 2.5% ex-auto on a YoY basis, up 2% including auto ().US media is celebrating June retail sales being flat YoY in nominal terms,
Up in real terms since cpi was negativewhich is actually down in real terms after adjusting for inflation of 3% YoY.
Only a small portion of the population is buying a home at any given moment. Either their housing costs are fixed (because of fixed rate mortgages) or they rent. And further, because a house is not a regular expense (as opposed to a rent or mortgage payment - it cannot possibly be representative of household expenses)CPI is not indicative of purchasing power since its allocation to shelter is via renting. When evaluating Americans' purchasing power you should be looking at the Housing Index: , which is up about 43%, or 50% when considering houses instead of apartments: . I threw in 60% because there's such a concept as desirable neighborhoods to live in.
Real wages by definition are after deflating for costs of all sortsReal wages are up only slightly since 2020, but the most expensive purchases people will ever make - real estate - have out stripped it by an order of magnitude while not being counted in CPI.
Yeah 65% of Americans are actively benefiting from house price risingAnd yes, I know 65% of Americans already own "a home," but that doesn't mean they like the home they live in. It's like saying I own a car already so car prices don't affect me.
No. There is a composition effect since the population parameter was median. The real wage doesn’t count zero wages and post-pandemic job gains have been concentrated in low wage sectors such as hospitality and food service. You’d expect if no one else’s wages changed and those people got their jobs back, the median moved down. But since the median has been flat to up, that means everyone else must have had their wages increaseReal wages looks to be unchanged from 2020 till now. However, the Big Mac seems to have beaten real wages
House hold expenses aren't what I'm talking about. I'm talking about purchasing power. Purchasing power isn't just based on what you spend, it's also based on your perception of what you can spend.Only a small portion of the population is buying a home at any given moment. Either their housing costs are fixed (because of fixed rate mortgages) or they rent. And further, because a house is not a regular expense (as opposed to a rent or mortgage payment - it cannot possibly be representative of household expenses)
It's controlled using CPI, which doesn't include home purchases.Real wages by definition are after deflating for costs of all sorts
The home you live in is not a liquid asset.Yeah 65% of Americans are actively benefiting from house price rising
Yes: for most households (~70% of them) that own their own home, an increase in house prices has no impact since they pay a fixed rate mortgage and will simply swap one house for another. Most renters aren’t looking to buy at any given moment (and rents are rapidly falling). Saying that home prices are rising is relevant only to a tiny fraction of the population at any given momentHouse hold expenses aren't what I'm talking about. I'm talking about purchasing power. Purchasing power isn't just based on what you spend, it's also based on your perception of what you can spend.
CPI most definitely includes home prices since home prices are what is used to calculate owners equivalent rent. Higher home prices, higher OERs, higher inflation.It's controlled using CPI, which doesn't include home purchases.
These are all included in the CPIHigher housing prices also means:
- Higher property taxes
- Higher insurance costs
- Higher cost of moving to another home
People feeling “trapped” in their current homes is just the standard American consumer being grumpy. Internal migration is rare, even during falling rate environments.It is far from a given that they are benefitting. Many people, in fact, feel "trapped" in their current homes. Do you even live in the US?