The NYT article on the extraordinary decline in existing home sales reported for September discussed the potential impact of a sharp decline in house prices on the economy. It gave the range of estimates of the potential decline as $2 trillion to $4 trillion in lost housing wealth. It is worth noting that if house prices fell back to their long-term trend levels it would imply a loss of $8 trillion in housing wealth.
Most economists have been hugely overconfident about the state of the housing market and have underestimated its potential negative effects on the economy. It therefore would have been appropriate to include more pessimistic assessments in this piece.
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