Tuesday, May 30, 2017

Low Inflation?

We are told that inflation is well below the 2% rate targeted by the Fed.

In the last five years the value of our house has gone from $420,000 to $720,000. What has increased its value? Not capital improvements; it has not had any, has not so much as been repainted. So, how does 2% inflation account for a 71% increase in the value of our house in just five years?

Just as a point of information, at the peak of the last housing bubble, just before it collapsed in 2008, this house was valued at $550,000. Despite being valued at some 30% higher now, we are told that this value is not artificial or part of a bubble for reasons that are too complex for uneducated slobs like me to understand. Right.

1 comment:

bruce said...

I'm only guessing that 'inflation' as the Feds define it is not the same as home value 'inflation' aka: appreciation.

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