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Comment by analyte123 | Hacker News Reader

70% of shelter CPI is calculated by calling random homeowners up and asking them how much they think they could rent out their house for. It was switched to this in the early 80s when the Volcker shock spiked interest rates, housing payments, and CPI. Whatever you want to say about this method’s conceptual validity, it’s clearly a lagging indicator.

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It is a flawed mechanism. Because homeowners are merely speculating based on Zillow or whatever.

They should really build a Kafka pipeline of actual rents from various geographies and get real data.

>Because homeowners are merely speculating based on Zillow or whatever.

Which seems fine, because most americans own their house and aren't paying market rent. Likewise, a decent portion of americans are on rent control, which means they're not paying market rates either. Using "actual rents" (market rents?) wouldn't represent the actual expenditures for a huge portion of the population.

Just curious are there any solid sources for percentage of rental units subject to rent control?

Google failed me in my quick search

Or just ask RealPage what they're going to set rents to next month.

They do also collect actual rent data, but that is fraught with its own problems. Notably that the large majority don't rent. If you are not collecting opinions from a meaningful segment of the population, you've missed the whole reason for preparing the CPI.

Actual sale data is the best way to find out someone's opinion, but asking them what they would hypothetically pay is nearly as good if sales data is absent. What is most important is to get an opinion from a statistically wide range of people. A billionaire paying $10,000 for a loaf of bread is not indicative. You need an indicator of what most people think.

There is no perfect mechanism.

Wow, that is terrible. It would be trivial to track recently rented homes on Zillow or Redfin and ask the renters to use the figure on the rental contracts from those.

Rents are tracked separately, but weighted less than OER, presumably because most people own their houses. See "Rent of primary residence" and "Owners' equivalent rent of residences" in https://www.bls.gov/news.release/cpi.t02.htm

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