Okay, here's a little secret. Don't anyone tell the Washington Post. Realtors make money by selling real estate. Apparently the Post still hasn't discovered this fact. In an article on yesterday's stock market plunge, the Post reported on new data on existing home sales from the National Association of Realtors. Their new chief economist, Lawrence Yun, told the reporter that temporary problems in the subprime market will hold down sales this year, but "the fundamental momentum clearly suggests stabilizing price trends in many local markets." The Post, whose primary source on the real estate market in 2005 and 2006 was David Lereah, Mr. Yun's predecessor, didn't see any reason to present any alternative perspectives on the real estate market. Other economists might have pointed out that house prices are still close to 70 percent above their long-term trend values. They may have also pointed out that credit is drying up rapidly for large segments of the real estate market, not just the subprime market, which was 25 percent of the market in 2006. The fact that most investors aren't anxious to lose money may make many of them unwilling to sink more money into a secondary mortgage market that they quite obviously do not understand. Anyhow, it would be a big step forward if the Post could present assessments of the real estate market from someone whose livelihood did not depend on selling real estate.
--Dean Baker
