Hedonic estimates of the cost of housing services: rental and owner-occupied units
Recent papers have questioned the accuracy of the Bureau of Labor Statistics' methodology for measuring rent increases and changes in implicit rents for owner-occupied housing. We compare the BLS estimates of increases in rents and owner-occupied housing costs to regression-based estimates using data from the American Housing Survey. A hedonic approach that explicitly calculates capitalization rates produces a methodologically consistent measure of the rental cost of owner-occupied housing. We estimate that between 1985 and 1999 the Consumer Price Index (CPI-U) may have understated the cumulative increase in rents. But any understatement was slight. On the other hand, we estimate that the CPI overstated the increase in the cost of housing services for homeowners by 0.4 percent on an annualized basis from 1985 to 1999.
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References listed on IDEAS
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- Theodore M. Crone & Leonard I. Nakamura & Richard Voith, 2004.
"The CPI for rents: a case of understated inflation,"
04-17, Federal Reserve Bank of Philadelphia.
- Theodore M. Crone & Leonard I. Nakamura & Richard Voith, 2006. "The CPI for rents: a case of understated inflation," Working Papers 06-7, Federal Reserve Bank of Philadelphia.
- David Genesove, 1999.
"The Nominal Rigidity of Apartment Rents,"
NBER Working Papers
7137, National Bureau of Economic Research, Inc.
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"Productivity, R&D, and the Data Constraint,"
American Economic Review,
American Economic Association, vol. 84(1), pages 1-23, March.
- Linneman, Peter & Voith, Richard, 1991.
"Housing price functions and ownership capitalization rates,"
Journal of Urban Economics,
Elsevier, vol. 30(1), pages 100-111, July.
- Peter Linneman & Richard Voith, 1988. "Housing price functions and ownership capitalization rates," Working Papers 88-8, Federal Reserve Bank of Philadelphia.
- Crone, Theodore M. & Nakamura, Leonard I. & Voith, Richard, 1998.
"Measuring housing services inflation,"
98-21, Federal Reserve Bank of Philadelphia, revised 01 Jan 1999.
- W. Erwin Diewert & Kevin J. Fox, 1999. "Can measurement error explain the productivity paradox?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 251-280, April.
- repec:ucp:bknber:9780226304557 is not listed on IDEAS
- Linneman, Peter, 1980. "Some empirical results on the nature of the hedonic price function for the urban housing market," Journal of Urban Economics, Elsevier, vol. 8(1), pages 47-68, July.
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