This morning we got another absurd inflation number from the BLS (3.7%/year). As harped on numerous times here, headline inflation is untethered to actual costs in the U.S. partly because of the Owners’ Equivalent Rent scam. There’s a recent beautiful example of this in our own Florida neighborhood (Abacoa, within Jupiter, which is within Palm Beach County).
The house recently sold for $3.1 million and will, I’m sure, cost the new owners another $3.1 million in property tax, maintenance, insurance, landscaping, pool care, etc. over the years. What would an owner tell the BLS about what he or she thinks it would cost to rent? Perhaps the Zillow number of $8,593 per month. That’s about half of what an interest-only 30-year mortgage on the place would cost, if a 30-year interest-only mortgage were available. It might be 20% of the real cost of living in the house as an owner.
Note that this is pretty much the top of the Abacoa market. The owners apparently bought it, invested a ton of money in renovation (though it was not taken back to the studs nor was the room layout changed), and then decided that they were too rich to live in a $3.1 million house.
Here’s the complete price history:
Only 4,121 sqft, barely any backyard, no waterfront view, next door neighbors practically sitting in your living room, and I don’t even see a garage! All for just $3.1 million? What an absolute bargain!