The Post has finally gotten wind of the housing bubble after years of relying on David Lereah, the chief economist of the National Association of Realtors, as its main expert on the housing market. Unfortunately, it is still having some serious trouble getting the numbers right. A front page story on the decline in housing prices in the DC area tells readers that, "prices for single-family houses fell 7.7 percent in the region during the third quarter of 2007 from the comparable quarter in 2006. That is among the steepest declines in home prices since 1991, when prices fell 5 percent during the first quarter from the first quarter of 1990." Let's parse this one carefully. A 7.7 percent drop in house prices is "among the steepest declines" since 1991, when we are told that house prices fell by 5.0 percent. Okay, where I do arithmetic, 7.7 percent is larger than 5.0 percent, so the recent price decline is considerably larger than the 1991 drop. Also, were there periods between 1991 and 2007 when house prices fell by more than 7.7 percent or even more than 5.0 percent? In fact, there was no period of comparable price declines in the data referred to in the article, so why does the piece imply that there were other large price drops over this 16-year period. This is a front page article in the Sunday paper. Doesn't anyone proofread these things?
--Dean Baker
