December 5, 2005

Bizzy’s AM Coffee Biz-Econ Links (120505): WORMs Still Waiting for the “Housing Bubble” to Burst

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 8:02 am

Home prices continue to go up. Last Thursday’s report from the Office of Federal Housing Enterprise Oversight (OFHEO, www.ofheo.gov) tells us that home prices increased 12.02% during the 12 months ended September 30 (2.86% in the latest quarter). Look at how home prices have increased during the past five years, obviously far outpacing general inflation of during that same period:

HousingInflation

Most economists predict that home prices will, with some exceptions, continue to increase in the next few years, though more likely than not at a slower rate.

So why do the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media) insist on talking about a housing “bubble,” and after four years of getting it dead-wrong, still act as if a “bubble” is either imminent or already happening? Noel Sheppard of The Free Market Project weighs in:

Media claims about a “housing bubble” are nothing new. Since before the 9/11 terror attacks, the media have been calling the housing market a “bubble” while predicting an imminent, devastating decline. Not only have they been wrong in forecasting such a top, they have thoroughly mischaracterized what an investment bubble is. Now that the market for homes has finally slowed a bit, the media are declaring the bubble has burst.

….. It’s been more than four years since the media began reporting bearish housing predictions in earnest. Yet real estate values have forged ahead. As a result, the net worth of the average citizen is now at an all-time high, well exceeding what Americans enjoyed during the stock bubble years of the late ’90s and early 2000s. In addition, and maybe most importantly, close to 70 percent of residential dwellings are now owned by one or more of the inhabitants, also an all-time high.

So who’s right about real estate – the media that have been predicting a crash for more than four years, or past and future Federal Reserve chairmen along with millions of Americans who have bought a piece of the American dream during this run-up?

So far, the answer is clear. However, given the seriousness of this issue, and just how much impact the housing market has on the rest of the economy, the media should learn from this and present even-keeled reports that deal with how people should invest their money.

Don’t hold your breath.

Also, check out the historical graph at the Free Market Project link. There’s no doubt that housing has been good long-term investment over the last 35-plus years. There’s little doubt that it will be an at-least acceptable investment in the coming years.

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3 Comments

  1. Just imagine what the impact of the negative reporting would have been in the absence of the “alternative media”. The WORMs (or LSM, as I prefer to call them – stands for Lame Stream Media) still have not realized that their stranglehold on information has been broken. If not for the internet (thank you, Al Gore), The DNC Pravda (I mean DNC Times – I mean NY Times) and its associates would have already toppled this presidency as they did Nixon.

    Comment by Pat'sRick© — December 5, 2005 @ 8:38 am

  2. Apparently my last post evaporated into the blogosphere.

    Just imagine what the impact of negative reporting would have been without the alternative media. Since the President has been reluctant (until recently) to take on the negative spin, only the alternative media has countered the persistent, almost treasonous statements and innudendos about an economy that has been growing ever since 9-11.

    Remember Dan Blather’s explanation for the success of the all-volunteer military? “Maybe in this economy, it’s the only job they can find”. Ath the time he made that statement, unemployment was about 5.5%, less than half of European unemployment.

    Comment by Pat'sRick© — December 5, 2005 @ 8:55 am

  3. #2, I remember Rather well. Comments are moderated, and I need to get my web buy to indicate that. Sorry.

    Comment by TBlumer — December 5, 2005 @ 10:07 am

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