[CameronNemo]

Because of the way shelter costs enter into the CPI, these increases in owned home and rental costs have not yet contributed much to overall inflation.

Our analysis, however, suggests that these higher shelter prices are likely to soon show up more clearly in the monthly CPI, potentially adding several more basis points (hundredths of a percentage point) to monthly inflation than they do now.

https://www.whitehouse.gov/cea/written-materials/2021/09/09/...

[wonderwonder]

That is a pretty convenient way to calculate CPI. Rents are up over 20% and the cost of homes has been a rocket ship.

[runako]

If you own your house, your cost did not go up. Most Americans own their homes. That's how to look at it. The inflation has likely been a net good for you if housing costs in your area have increased.

[beerandt]

As part of the market, your opportunity costs go up. Meaning you need a higher sale price to offset a higher buying price if you want to move.

Or that locking in that current cost means less inventory on the market.

Housing costs going up across the board is only good if you have a surplus of inventory to sell that doesn’t need immediate replacement. Ie, not your primary home.

People owning only their primary residence are at best breaking even, despite amortizing their (cheaper) purchase price beyond a market increase.

[runako]

This ignores the linkage to compensation. Broad inflation leads to people earning more. So if you own your home, you break even on the home (ignoring the downstream effect of having more home equity for your heirs).

But you can reasonably expect to be paid more in 2022/2023 than you would have been in those years had inflation stayed on the 2019 trend line. That will, in turn, make it easier for you to pay your mortgage and increase savings. You essentially get a raise to cover the fact that other peoples' housing costs increased*. That's the crux of the benefit.

* yes, some of your expenses increased as well, but the wage increases you receive need to cover the increase in those expenses PLUS housing expenses because market compensation increases for broad categories of workers, not for your specific household budget. So you still get "for free" the housing-linked part of the inflation adjustments to compensation.

[notch656a]

As the value of your home goes up, your 'rent' goes up in the form of increased property taxes and depreciation becoming more expensive on the improved land and structures residing on top of the land.

This may seem invisible to you now, but as assesors re-assess your house, you realize how much more you are paying in 'rent' (maintenance) on your house for materials like wood and labor, or you're forced to sell at depreciated value because in 50 years you end up the old folks home or whatever -- sooner or later we all pay rent on the property we own. Basically 'using up' your house is getting more expensive in terms of opportunity cost.

[runako]

All of that was going to happen, regardless. The only difference is now compensation will ramp up (COL increases will eventually have to match real inflation) and the (bigger) expense of mortgage interest will be smaller as a proportion of income.

Or are you suggesting that inflation will drive wood etc. to be a relatively larger proportion of a homeowner's future expenses? I would strongly disagree with that thesis.

Re-reading your comment, it looks like you're arguing that increasing home values are bad for homeowners. I also strongly disagree with that.