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Home Publications Blogs Beat the Press The Washington Post Still Has Not Heard About the Housing Bubble

The Washington Post Still Has Not Heard About the Housing Bubble

Friday, 02 July 2010 05:23

It apparently takes a long time for news to reach Washington, or at least the Washington Post. That is the only possible conclusion that comes from reading the front page Post article on data showing very weak pending home sales in May that told readers:

"Home sales were expected to decline once the credit ended, but May's acute drops have surprised many analysts. If the trend continues through the rest of the year, it could upend the market's tepid rebound and undermine the broader economy."

Actually analysts who follow housing data were not at all surprised by the sharp drop in pending home sales in May. The Mortgage Bankers Association purchase mortgage applications index had plunged after the expiration of the homebuyers tax credit at the end of April. 

It is also reasonable to expect further declines in house prices since the bubble has not fully deflated. House prices are still about 15 percent above their long-term trend levels.

The Post had a policy before the bubble bursts of talking exclusively to economists who were unable to see the $8 trillion housing bubble or unwilling to talk about it. It appears to still have this policy.


Comments (1)Add Comment
written by izzatzo, July 02, 2010 7:23
Any journalist understands that news requires a change in something, and in economics a change in the total with respect to a change in something else that caused it is called a marginal or incremental change, like a change in total house sales with respect to the change in real price as influenced by a tax break.

However, during the housing bubble, a change was also known as a derivative, so the first derivative is a change in the total, and the second derivative is a change in the change in the total and so on.

That's why all the journalists and others missed the housing bubble then but don't miss changes in current house sales now as surprises. The public relations machine for the financial industry redefined change to exclude derivatives because it wasn't really a change at all, just a more efficient way to distribute risk, so everyone ignored it as news. No surprise there.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.