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Home Publications Blogs Beat the Press The Washington Post's Economic Experts Expect House Price Decline to Stop Quickly

The Washington Post's Economic Experts Expect House Price Decline to Stop Quickly

Thursday, 21 April 2011 05:08

House prices have been declining at the rate of 1 percent a month for the last four months. This is why it was somewhat surprising to see Paul Dales, a senior economist at Capital Economics, quoted in the Post as saying that house prices would decline by about 5 percent this year. That would imply a sharp slowing in the rate of price decline in the months ahead.

The Post gained notoriety during the run-up of the housing bubble for relying on David Lereah, the chief economist for the National Association of Realtors, as its main and often exclusive source on the housing market. Mr. Lereah was also the author of the book, Why the Real Estate Boom Will Not Bust and How You Can Profit from It.

Comments (2)Add Comment
written by scottindallas, April 21, 2011 7:32
Your article in Counterpunch, shows you're just as daft as those you criticize. The cause of high oil prices--the driver of EU inflation, is not demand, WHICH IS DOWN but speculation. Interest rates are not always relative. Just as a car that is "flooded" won't benefit from more gas. Lowering rates doesn't necessarily mean improvements in the economy.

A Fed discount rate of 2% is stimulative, so, what about free money? Like a flooded carburetor, when there is too much money/gas in the system, you get combustion in odd parts of the system. Like explosions in the exhaust manifold--(a backfire) our ultra low interest rates are causing commodities speculation across the board.

No, the Fed needs to RAISE interest rates to a stimulative level, rather than keeping them at FREE. You unsupported suggestion that oil demand is up is as egregious an error as missing the housing bubble--caused by another oil speculation boom. Here's a tip Dr. Baker, look as storage and capacity--there is none, refinery output is down, and you say oil demand is booming. By the way, citing commodities traders is not a good source for information--they lied in 2008 they've been lying in 2011. Don't be a pompous idiot Dr. Baker, why should we listen to someone who missed the oil speculation bubble in 08? to throw your petulant argument back on yourself.

I appreciate much of what you do here, but not when you engage in the very uninformed speculation that you slam your critics with
written by Sherparick, April 21, 2011 7:35
When I read stories like this, it always bugs me that they report these prices in "nominal dollars" and do not report an inflation adjusted price. Here, the report that the median house price has declined to $159,600 in 2011 dollars could have been compared have been inflation adjusted and compared to 2000 dollar, when it would be be equaled $122,985.14. http://www.bls.gov/data/inflation_calculator.htm

Finding this information took me all of 1 minute using Google. One would think an Ivy league reporter and his/her editor on the WaPo could even figure it out instead of just putting a Real Estate Association press release. And as for why houses are not flying off the counter at these prices, perhaps the same WaPo writers and editors would check out Bill McBride's Calculated Risk and learn that the Medium income is now back to 1997 levels.

I've been more upbeat lately, but even as the economy recovers - and I think the recovery will continue - we need to remember a few facts.

There are currently 130.738 million payroll jobs in the U.S. (as of March 2011). There were 130.781 million payroll jobs in January 2000. So that is over eleven years with no increase in total payroll jobs.

And the median household income in constant dollars was $49,777 in 2009. That is barely above the $49,309 in 1997, and below the $51,100 in 1998. (Census data here in Excel).

Just a reminder that many Americans have been struggling for a decade or more. The aughts were a lost decade for most Americans.

And I'd like to think every U.S. policymaker wakes up every morning and reminds themselves of the following:

There are currently 7.25 million fewer payroll jobs than before the recession started in 2007, with 13.5 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.1 million have been unemployed for six months or more.

So even as we start to discuss how to fix the structural budget deficit, and also to address the long term fiscal challenges from healthcare costs, we can't forget about all of these Americans.

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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.