Both the Rent and OER indexes of the CPI are moved by inflation in market rents. As long as "location-location-location" holds, rent on owned properties will rise at about the rate as rent on nearby rental properties, after controlling for differential effects of aging, which the BLS does. The "how much would your home rent for" question is only used in generating weights
Whoever sent this in: I would like to know more. What do you mean by weights? How exactly is the OER calculated? I want to fix this if I got Turley's comments wrong.
2 comments:
Can't answer for anonymous, but maybe this provides a clue:
http://bigpicture.typepad.com/comments/2007/05/oer_cpi_and_the.html
You've probably read this, from BLS, attributing the divergence of rent from OER to market segmentation:
http://www.bls.gov/ore/pdf/ec070090.pdf
Very Interesting post on Meaurement of CPI Owner Rents, Thanks for sharing with us.
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