I must not understand something about journalism. I thought reporters are supposed to seek out the views of neutral commentators on important issues, not just those who have a clear stake in pushing a particular line. Apparently that's not the case. In an article reporting on the largest plunge in annual home sales in 17 years, the only expert cited is David Lereah, the chief economist for the National Association of Realtors, and the author of the 2005 bestseller Why the Real Estate Boom Will Not Bust and How You Can Profit From It. Those interested in a somewhat more pessimistic take on the housing market can take a look at the CEPR website. For example, a short paper looking at key housing indicators shows that the average rate of sales of existing homes was 3.9 million in the years 1993-95. Population growth has been around 12 percent over the intervening period, but 2006 sales, at 6.2 million, are almost 60 percent higher. Virtually no one in the mid-nineties predicted a huge upturn in home sales and prices, and no one has retrospectively come up with a good explanation for this unexpected boom, other than a speculative bubble.
--Dean Baker
