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Home Publications Blogs Beat the Press What Does a "Stabilized" Housing Market Mean to the Washington Post?

What Does a "Stabilized" Housing Market Mean to the Washington Post?

Monday, 20 September 2010 04:29

The Washington Post told readers that this week's reports on home sales are expected to show increases which it describes as "a sign the U.S. real estate market is stabilizing." It's not clear what the Post means by stabilizing.

While the number of homes being sold each month is likely to remain reasonably even in the months ahead, prices are likely to resume their fall. They still have another 15-20 percent to drop in order for the bubble to fully deflate and prices to return to their long-term trend.

It would be helpful if the Post did not rely exclusively on experts who completely missed the $8 trillion housing bubble. During the years the bubble was expanding the Post's main source on the housing market was David Lereah, the chief economist of the National Association of Realtors, and the author of Why the Housing Boom Will Not Bust and How You Can Profit from It.

Comments (6)Add Comment
written by izzatzo, September 20, 2010 6:57
Any economist knows that Lereah understood the concept of scarcity and land rent, that land is fixed and more cannot be produced. The real price of housing land would rise wouldn't it, driving up prices over a long term trend.

Stupid liberals.
written by skeptonomist, September 20, 2010 7:53
There is no particular reason for prices to return immediately to their long-term trend. Booms and bubbles tend to cause construction at rates far above the long-term trend, so an excess of supply may cause prices to drop below the trend for a while. The construction industry will probably be depressed for some time and for this reason it is unrealistic to expect a rapid overall economic recovery. Workers who were drawn into house construction now have to find jobs elsewhere.
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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.