Do Obama's Advisors Really Not Know About the Housing Bubble?
|Thursday, 07 July 2011 04:55|
This is the point that the Post should have been highlighting in an article about President Obama's comments on the housing market in his twitter townhall yesterday. Nationwide house prices had just tracked the overall rate of inflation from 1896 to 1996. In the decade from 1996 to 2006, house prices outpaced the overall rate of inflation by more than 70 percent.
At the point where President Obama took office, house prices had fallen by about 20 percent from their bubble peaks. Since there is no identifiable change in the fundamentals of the housing market, it is reasonable to expect prices to fall back to their trend levels. However, the article quoted Obama as saying:
“The continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected.”
This statement reflects a frightening degree of ignorance about the housing market. It should have been the main focus of the article as the Post attempted to determine whether President Obama and his advisers could really not understand the housing bubble, the collapse of which has given the economy the worst downturn since the Great Depression.