I feel like all these numbers are bogus. Housing? Seeing as it's nearly half of people's spending, I feel it should be weighted appropriately. And if so, real prices would be closer to 20% inflated in most markets YOY.
One of the main reasons people are doing this is they're realizing the dramatic cost differential between living in the city in a tiny apartment and living in a much larger space outside the city or in a smaller city.
This means many people can pay 20-50% over asking, but still end up paying less per month and having more space. This is in fact part of the reason people are willing to bid so much over asking. It's not because they're desperate, at least for my anecdotes, but because you can bid very aggressively and still pay substantially less than you would for an apartment.
On top of all that, rental costs in most cities are plummeting.
Despite the bizarre housing market right now, I wouldn't be surprised if on average most people were spending less on monthly payments.
To add a supporting anecdote from my recently finished adventure in house hunting, condos in desirable HCOL areas are also on fire but the demand actually dries up at a certain price point - around 1.3-1.4MM where I live. The most expensive downtown areas (where condos regularly go 2MM or higher) seem to have a massive glut of units and sometimes entire buildings on sale.
Personally, I bought a 1MM condo that was originally priced at 1.2MM and had a price decrease. It's not particularly cheap by any means, but it's not significantly more than I would have been paying in 2019, I don't think.
edit: A fun way to see this yourself is to use a search on redfin for "price reduced in 14 days" and see which neighborhoods / price points show up in your city. Where I live, it's the pricy condos. Single families still sell at almost any price point, and more affordable condos sell as well.
Unfortunately this means that if housing is inflating it punishes the portion of the population susceptible to the marginal rates which in the long-run will be everyone. It would be great if there was a "marginal" CPI which highlighted the changing prices of capital assets.
Yes, I can sell the house for more money afterwards, but the inflation is still there, people are getting less whilst paying more. This is an especially rough deal for non-homeowners who want to enter the market, because they have not profited of the apprecation in the past decade.
Its by far the most expensive purchase in peoples lives, vital to our needs just like food and water... And I really dont agree with not tracking it in CPI.
Please stop spreading this false information. CPI absolutely does track housing: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
Now, you might disagree with the methodology used above, in which case it is healthy to discuss alternatives, or where CPI housing calculation has issues.
Either you didn't know rent was included in CPI or you are making the very odd claim that homeownership is like food or water, implying you'll drop dead if you rent a home rather than buying one.
I'd expect anecdotal numbers from hn to trend towards higher CoL, which likely correlates with spending a higher percentage on housing.
If you own your house and aren't intending to sell, and house prices double but food and energy is down, you will feel things are cheaper even if the index shows it rising.
And in the case your house value halves but food and energy double, you'll feel things are more expensive even though the index shows it falling.
The indices are important, but people often misapply them.
I don't know whether that number is true or not, but it doesn't seem implausible given mortgages and rent.
Houses may or may not be half of people's spending like the poster above claimed, but homeowners generally do not see prices inflate when a small portion of their neighbors buy or sell homes.
So whether or not housing is 50 percent of people's expenses that doesn't mean 50 percent of expenses have been subject to inflation.
I do not know if I agree with that reasoning, but I would say that if you are looking to purchase a new home at some point in your life (even if you already have one), or you have kids or family that is looking to purchase a home, it is very possible that you are affected by your neighbors’ buying and selling in the event that it causes you to start saving more to meet the goal of purchasing a new home. And I think a large share, maybe a majority of Americans fall into this category.
For example, if I am in a “starter home” and had a goal of upgrading to a bigger home to accommodate growing family, and that bigger home goes from $450k to $750k over the course of 5 years, then that $300k increase is surely felt and dwarfs the effects of any other changes in price in a typical family’s budget. Best case scenario is you live nearby and your starter home has increased from $300k to $400k, but the price increases in lower end homes will never make up for price increases in higher end homes.
So we can conclude that 5 percent of Americans might be effected by house sale in a given year, and some might be downgrading a home or moving to a cheaper location.