I was actually referring to the various claims discussed in the papers that you were not interested in, rather than this particular specific claim. But this one will do as well.
Yes more free money for Japan... Trillions of yen for everyone
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Yeah I was expecting you to spit out this nonsense.
Let's take a look at the construction of the NAR's 'affordability index'
http://www.realtor.org/topics/housing-affordability-index/methodology
What do we find?
First epic logical fail:
"The calculation assumes a down payment of 20 percent of the home price"
This is their formula: MEDPRICE x 0.8 x ( IR/12) / (1- (1/(1+IR/12)^360) )
Really? You find that realistic?
Here's the NAR's own top guy:
"Lawrence Yun, NAR chief economist, says the housing recovery's missing link continues to be the absence of first–time buyers. "There are several reasons why there should be more first–time buyers reaching the market, including persistently low mortgage rates, healthy job prospects for those college–educated, and the fact that renting is becoming more unaffordable in many areas," he said. "Unfortunately, there are just as many high hurdles slowing first–time buyers down. Increasing rents and home prices are impeding their ability to save for a down payment, there's scarce inventory for new and existing–homes in their price range, and it's still too difficult for some to get a mortgage."
So, implicitly by the NAR's own admission, their own assumption stinks! Hysterical...
And how about this: college educated millenials need to save for 15 years to afford a downpayment and non college educated ones would have to save for 24 years to do as much:
http://www.denverpost.com/2016/05/23/millennials-at-high-risk-of-always-renting/
or this:
http://fortune.com/2016/04/20/rent-millennials-home-downpayment/
The St Louis Fed even has the gall to recommend to these poor kids to "delay the purchase of a home with its unattendant debt burden until it was possible to buy a house that did not make the family's balance sheet dangerously undiversified and highly leveraged."
Isn't that rich? The Fed talking about high leverage and high home prices after decades of fueling asset bubbles...
Even if one accepts the 20% down payment assumption at face value (which no one in a sane mind would), look at what the NAR data shows: the chart below spanning 1999-2016 shows existing home sale median prices (white) vs their affordability index (orange). A level above 100 for the affordability index means that a family with the median income has exactly enough to afford the median priced home. And so even now, with existing home prices soaring to new highs, the NAR have their AI at ~160, which means that households supposedly have 1.6x the income needed to afford a median priced home... Does that make any sense given the reports on the ground as seen in the two news links above? How do you explain such a stark difference, between the Fed warning young Americans not to buy homes and an NAR saying "no no no, it's all ok, affordability is actually just fine" to the same geniuses then saying in the next breath: "increasing rents and home prices are impeding young people from saving for a downpayment"?
I mean this stuff is just priceless.
Now coming back to the quote by the BLS justifying their use of CPI and owners equivalent rent:
"For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period."
(OER definition: "Owners' equivalent rent (OER) is a dollar amount that is published by the U.S. Bureau of Labor Statistics to measure the change in implicit rent, which is the amount a homeowner would pay to rent or would earn from renting his or her home in a competitive market.")
At first glance, if swayed by this sleight of hand, one could go "oh look, OER is indeed a good measure of housing cost inflation". But it's in fact a red herring for a couple of very good reasons, first because in short, the NAR affordability measure assumes home ownership... i.e., it doesn't matter that principal+interest has been going up at 4.2% annually if you can't afford the house to begin with and are priced out of a market that only a select few can get into! (as the above reports show, first time homebuyers have declined to near a 1987 low of 30% of the market from 40%). In other words, the NAR affordability index cannot show "how many and which kinds of households can and cannot afford those properties that are for sale" (Stone, M.E (2006). What is housing affordability? The case for the residual income approach. Housing Policy Debate, 17 (1), 151-184).
The second reason why the BLS' comparison of OER to NAR affordability is disingenuous is because it doesn't include property taxes, insurance and utilities. We know that most renters on the other hand include property taxes at the very minimum, in their rental price. So comparing OER to NAR AI is not an apples to apples comparison. Amazing. This is basic common sense, something the govt seems incapable of.
The proper/common sense comparison should be between OER and house prices (existing home and NEW homes). Why? Because we want to measure how hard it is to maintain a constant standard of living, not just track prices increases. Looking at house price increases, what do we find? An 8% annual increase, DOUBLE the OER annual increase cited by the BLS over the 1983 to 2014 period:
And actually this is what the BLS says is housing inflation: 'owners equivalent rent' at 3%, a full 62% lower than reality.
http://data.bls.gov/timeseries/CUUR0000SEHC?output_view=pct_12mths
These guys love to dazzle with manure don't they.
The second EPIC logical fail is for the BLS to ignore the price of new homes with their choice of the remarkably oblivious OER which only focuses on existing home rent equivalence. We want to measure what it would take to maintain a constant standard of living, not just price increases. So, if I'm a young 28 year old in America today thinking about a long term investment for my new family, I might very well prefer a new home. And I might think to myself, I wonder what my parents paid for their house some 30 years ago. How much worse off am I today? And what do I find?
https://www.census.gov/construction/nrs/pdf/uspricemon.pdf
An annual increase in the median price of a new home of 9.23% over 33 years, from June 1983 to June 2016. But no, no problem says the BLS, housing inflation is actually closer to 2-3% they say, 207% lower than reality. Meanwhile, our 28 year old has to find $306,000 and go into debt up to his eyeballs to buy the house. Is it any wonder that 63% of Americans don't even has $500-$1,000 saved for an emergency? Is it any wonder why people are stressed out trying to make ends meet?
A reasonable index would track a blend of existing home and NEW home PRICES in the appropriate ratio based on historical trends. So say you had in a given year the median existing home price go up by 5% and the median new home price go up by 10%, so the weighted increase would be 0.6 x 5% + 0.4 x 10% = 7%. That would be honest reporting to the people and it would blow out your claim that inflation adjusted GDP has been growing in the recent past, given how big of a weight housing costs carry in the basket. But instead the govt hides behind OER and you break out the pom poms for them.
It's a shame that gullible people like you not only believe this nonsense, but add insult to injury by advocating for it.
Btw, the same NAR data you linked to is by the same organization that admitted to fudging the data:
http://www.irvinehousingblog.com/20...on-of-realtors-caught-lying-about-home-sales/
So please, spare me the sanctimonious nonsense you bring up re Chapwood, John Williams, David Stockman et al, it's a bit ridiculous.
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Reading comprehension must not have been your forte in school... No, the other items beside "sales" are not typos but instead general categories, which as I've explained to you but you stubbornly refuse to acknowledge, have precise items behind them. Look, I can play this stupid game with you too: take the EPI Index which has "Domestic Services". Should I raise a stink like you have because the category is broadly defined? Come on man, grow up.
You haven't already told me jack. No, YOU gots to get some common sense. Again, what you linked to is NOT raw data, the actual items and the actual prices before the sausage making is introduced, hedonics, seasonal adjustments, substitution within categories etc. Without that level of granularity, you have NO IDEA how they get to the index sub categories you linked to above, if they are fudging/manipulating the data, and therefore CANNOT claim the high ground vs John Williams or Ed Butowsky et al. They don't provide the granularity, but neither does the BLS.
Yes, it does in as much as it shows you cherry picking and demonstrates your lack of critical thinking. See my post #62 in this thread for a debunking of your claim above. The repeat rent method is equally as nonsensical as the NAR data. See the post.
The EPI is only a step in the right direction. It needs a lot of improvement to be a realistic picture of inflation as it matters to people. It would have to include house prices, health insurance premiums, autos, college tuition. While these are not "everyday" items, they are items that weigh heavy on a consumer's lifelong financial well being and CANNOT be ignored. Call it the "Key Items Price Index" of KIPI. Somebody should create it. The EPI ironically actually proves my point at least in part because it shows a non trivial upside divergence vs the CPI for much of its history. But it's still insufficient as an index to reflect a fully orbed reality for the average American.
I have demonstrated it, whether you acknowledge that or not is irrelevant. How do know? Because I am a consumer myself and have common sense, something you seem to lack sorely. Yes, the basket should reflect proper weightings, but that is not being done right now. I think I'll take a look at healthcare next.
Only a partisan hack will make a big deal about 5 or 5.8%. So they revised it very recently to 8.375%, big whopping deal. What do you do with the 5.8% weight prior to that, considering that health care costs are a major items for millions of Americans, directly or indirectly through their employers who aren't shy to pass on cost increases to their workers. What do you have to say about that? Let me guess, nothing. Instead, some snide deflection about socialism or nonsense like that?
No, re repository, that's a non sequitur. I'm saying that YOU lack common sense.
I've never dwelled on the Austrians' more obscure theories. It is enough for me that they are intellectually more honest and superior to Keynesians and their descendants.
Yes, contradictory. Where are the answers to the questions I posed you? Why do you run from them? Here they are again:
First, the socialist's answer to the injustice foisted upon people by the government incompetence is more government. I advocate for less government. So your labeling is contradictory. Second, caring about the effects of government incompetence on people is something that millions of conservatives in this country do. One need not be a socialist to do so. Do you acknowledge this fact? If you cannot acknowledge this it only shows you're bat crazy partisan. If you say I don't know conservatives' motives then I will say to you in response that by the same token you cannot know socialists' motives at which point you have no argument left in claiming that I am a socialist. Yes? So which nonsense answer of yours will it be? Third, re why not call you a socialist? Because it has nothing to do with the topic of this thread as I've said before.
Where are your answers to the above? What are you, one of those hit and run posters? Don't have much patience for that kind of nonsense.
Re you enjoying calling me a socialist, knock yourself out. It only confirms your irrationality and that you are a bully.
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All rightie then, I think it's best if we just agree to disagree at this point...