The Wall Street Journal Discovers the Housing Bust

Good to see that reporters and my fellow economists are now discovering some of the downsides of the housing bubble. The WSJ now recognizes the problem in part, although we're still only talking about something "harder than a soft landing but softer than a hard landing." But, that's progress.

The article earns a BTP goat prize for failing to note that current house price indices are failing to pick up the full decline in prices because they miss the various concessions (seller paid closing costs, buyer-side realtor bonuses, and seller subsidized mortgages) that sellers often use to move their houses.

The WSJ also notes that the housing affordability index hit a record low. How could that have happened, seems it was at record highs just a few years ago. Excuse me while I go tear my hair out.

--Dean Baker

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