1 Like
yep that makes sense since a flipper will probably buy more houses in a few months than the average person does in a lifetime they are going to skew the numbers. so even though 30% of houses are bought with cash i would imagine no more than 5-10% of Americans have ever paid for a house in cash.
Didn’t realize that you lose the last 3 months of interest if cashed out before 5 years. Just an FYI.
Inflation in electronics is just as likely caused by well off people being stuck at home and buying things for their house instead of vacations and dinners at fancy restaurants. Whatever changes were correlated with the stimulus were also correlated with a lot of other societal adjustments that would have impacted consumer behavior.
If you’re planning on cashing them out if Inflation normalizes back to 3-4%, I’d just wait til 3 months after the rate of return goes back to something that isn’t worth holding on to then just cash them out then and put it back into equities.
1 Like
I know jack shit about macroeconomics but the Fed buying trillions of dollars of assets for the last 10 years can’t be helping the inflation situation.
Owners equivalent rent is also a factor in GDP.
If you build a house and rent it out. Someone is paying for it. So you measure that and add it to GDP.
Someone builds the equivalent house and lives in it. No money changes hands. So you cant measure it unless you do some kind of fudge and estimate it.
Sure, if it’s from 2020 and there’s no correlation with regard to stimulus in other countries where it spiked.
The shelter one seems to be where the bullshit gets baked into the number.
1 Like
Ok, I think we are in agreement that the spike in the prices of certain types of goods (residential toilet paper, consumer electronics, groceries, furniture, home improvement services, residential housing, etc) in 2020 was based on a shift in demand rather than supply. We just disagree in that I believe it was primarily due to a dramatic and sudden shift in people’s lifestyles, whereas you believe it was primarily due to government stimulus. And neither of us have any studies or data.
1 Like
Econophile points out this isn’t how the CPI is calculated, but anyone with a fixed mortgage who doesn’t move has 0% inflation on shelter.
I have the option to purchase company stock at a 15% discount. I’m usually if the opinion that you shouldn’t mix investments with work, but the discount seems pretty generous. Any opinions?
Fair enough. I don’t think government stimulus had much/anything to do with the spike in residential toilet paper, groceries, or home improvement services.
My evidence on the toilet paper, as well as stuff like disinfectants, is that when all the stores near me were out of it and I wanted to stockpile before locking down, I drove to a poor neighborhood and the shelves were full.
So we only seem to disagree on consumer electronics, possibly some furniture, and possibly residential home prices.
I’d have to dive in further to come to an opinion on home prices, I’m not sure if there was enough stimulus to give people a down payment, but it seems possible for couples putting 3% down. $6,400 leveraged like that could theoretically increase a couple’s house purchase budget by $213,000. I’m also not sure whether I view that as a bad thing or not, I’d have to think about it. Personally I don’t think it’s a great idea to buy a house with only 3% down, but if I could go back in time to that moment and do it, I would. So… I can’t blame them in hindsight. But it’s probably not a good policy outcome, if it played a role.
Is there a lockup period? If you can immediately sell it for a profit, seems like a no brainer, so I assume there’s some kind of lockup.
You’re right but @iron81 has a point that if on a monthly household cash flow basis, someone one fixed mortgage will at least have that cost “immunized” from inflation for the term of the mortgage. But your are quite right that heating and electricity and all the other housing costs are going to creep up.
Sure but my utilities only make up about 10% of my monthly cost for shelter, so even if they’re inflating at 20% that’s not killing me overall. If rent goes up 20% that’s going to hurt quite a bit more, which is happening to a lot of people.
For homeowners, upkeep costs are probably inflating, so maybe like 15% of their shelter costs are subject to inflation.
1 Like
Shelter costs are calculated on what it would cost to rent an equivalent home. At least in theory.
In the CPI? I thought it was based on ownership costs? I mean, if it’s based on rent costs the official number is laughable right now and being fudged for sure, by a lot.
In the CPI. Apparently the homeowner is asked how much they think the rental value of their house is. I would definitely expect most homeowners to underestimate that in an inflationary environment.
Do you have to tie up a chunk of your salary for N months prior to purchase? And when you purchase, do you only get 15% off the current market value, or is there any look back?