I'm sorry, but like a rubbernecker staring at a crash by the side of a highway, I just can't look away. Here's the absolute latest on the housing bust: It's the media's fault.
No really, listen to David Lereah, chief economist for the National Association Realtor, explain the news that the Pending Home Sales Index dropped by 7 percent in July, as compared to June.
"Lereah said psychological factors account for much of the decline in July home sales.'We've never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy in growing and interest rates are favorable, he said. 'Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy. Contributing to this hesitancy is a lot of negative news stories, but in the end we believe that underlying market fundamentals will prevail.'"
Gosh. You don't suppose that all the exotic loans luring borrowers to buy houses way beyond their means had anything to do it? Or what about all that fevered speculation by flippers looking to get in and get out of the market while making huge profits? And isn't it possible that the general health of the economy might at least in part be due to all that money being spent by American consumers drawing down on their home equity? And what about the mainstream economists who have been warning about a housing bubble for years.
Naaah. It's psychological. If only those damn reporters would pretend that this wasn't happening, that everything was just hunky dory, that it makes perfect sense for houses to appreciate in value by a hundred grand a year, then we could all relax and go back to our carefree buy-a-condo-on-no-money-down ways.
I apologize to everyone whose option ARM loan just reset, bumping their mortgage payments up by 50 percent, because I'm clearly as much to blame as anyone. I've been obsessed with the housing market in this blog since February. Now the scales have fallen from my eyes: All this time I've been stabbing the economy in the back. I don't know how I'll be able to live with myself.
Regular readers will know that over the last eight months I have come to have less and less respect for the pronouncements of Lereah, who always does his best to spin the housing data in the most favorable-to-realtors possible manner. But this is a new low. If anything, the press has been very cautious about declaring that the housing market is in big trouble. Only when the data became absolutely indisputable did the mainstream media start shouting out the obvious.
Damned if you do, damned if you don't. If you warn about a crisis before it happens, you're accused of crying wolf. But if you wait until the sheep are getting mauled to say anything, your negativity only makes the animals feel even worse than they would without being eaten alive.