Cohousing-L Mailing List: Re: Reserves [was Rate of increase in HOA Dues?

[Sharon Villines (sharon]

But the relevant index would be the construction index, not the CPI.

Sharon

> On Apr 8, 2025, at 7:14 PM, R Philip Dowds via Cohousing-L <cohousing-l [at] 
> cohousing.org> wrote:
> 
> Brian —
> 
> I’ve never heard of the Chapwood Index, but I took a look at the referenced 
> website.  While it asserts it’s based on what people *really* buy, there’s no 
> findable-by-me explanation of the methodology used.
> 
> The CPI (Consumer Price Index) is calculated by BLS (Bureau of Labor 
> Statistics) on a hypothetical basket of goods important to most consumers in 
> a given base year; products in the basket are “weighted” to reflect how much 
> of the product is actually purchased.  The cost of filling that basket with 
> the same goods is then researched for subsequent years.  More arithmetic 
> converts the CPIs to the inflation rate.  The contents of the basket may not 
> change for years.
>      The three big complaints about the CPI are (1) selection of products for 
> the basket may be arbitrary; (2) identical products may not be available in 
> subsequent years; and (3) marginal rates of substitution may push consumers 
> to re-weight their purchases:  If the price of chicken goes up, people switch 
> to fish.  Some experts think the CPI tends to run high side; other experts 
> (more paranoid?) think the government jiggers the CPI to run low, to minimize 
> burdens on inflation-indexed public programs like Social Security.
> 
> Meanwhile, the Federal Reserve relies on the PCE (Personal Consumption 
> Expenditure) “deflator”.  This method relies on a basket filled with the 
> actual products (in weighted proportion) that people are actually buying at 
> the present time.  Then research retrieves what people were paying for the 
> same basket in a prior year, and inflation is calculated from there.  This 
> involves considerably more effort than the CPI, but many think it’s more 
> accurate.
> 
> I’m just guessing now, but it sounds to me like the Chapwood Index is a 
> variant on the Fed's PCE method.  What Mr Chapwood uses for product selection 
> and weighting is of critical importance.
> 
> ———————————
> Thanks,
> Philip Dowds
> Cornerstone Cohousing
> Cambridge, MA
> 
>> On Apr 8, 2025, at 4:54 PM, Brian Bartholomew <bartholomew.brian [at] 
>> yahoo.com> wrote:
>> 
>>> inflation at 5% (too low?)
>> 
>> https://chapwoodindex.com <https://chapwoodindex.com/> still appears to be 
>> around, and you can
>> check your area for the cost of living increase. Boston is 13%.
>> 
>> Brian
> 
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