Harvard Professor Deflates In the Money
Filling in for co-host Jack Cafferty, business reporter Susan Lisovicz introduced viewers to the first guest, Nicolas Retsinas of Harvard University: Well, if you're into gloom and doom predictions about the housing market, the news this week has plenty for to you chew on.
Lisovicz promised viewers that Retsinas, the universitys director for the Joint Center for Housing Studies, would help us figure out who is in for the most pain in the housing market, showing a preference for looking for victims in the economy rather than people who might benefit from housing values growing at a steadier rate, like first-time home buyers.
Retsinas quickly set about dispelling the notion of a housing bubble, noting something the Business & Media Institute documented in a November 30 analysis: the medias extreme predictions havent come to pass.
Well, talk about a housing bubble has been around now for the last three or four years, and reports of its demise may be a little exaggerated, but clearly its slowing, Retsinas, a National Housing Hall of Fame member, said in response to a question by Lisovicz about recent data showing record new home sales coupled with declining sales of existing homes.
The former Clinton-appointed Treasury official informed viewers that the national housing market is really an aggregate of wildly different local markets and that those supply/demand relationships have to affect those particular areas. Even so, Retsinas reminded the In the Money panel that overall it's been a pretty prosperous, a pretty thriving sort of housing market, even though there were some signals of slowing in selected markets, in selected jurisdictions.
Even though Retsinas said there was no national bubble, Fortune editor Andy Serwer continued assuming one existed. He argued that the Anderson Forecast by UCLA predicts if this thing does burst it would have dire consequences on the job market. They're saying 800,000 jobs might be lost, 500,000 in construction, 300,000 in the related finance sector.
Answering Serwer, Retsinas urged the business reporter to have a longer view of the economy, noting that historical perspective is important. Nationally, home prices have not declined, as best we can tell, since the Great Depression.
Of course, the way CNN generally and Serwer specifically have reported economic news, one might think there was another Great Depression on the horizon. The Business & Media Institute noted, for example, that Serwer predicted an economic downturn resulting from Hurricane Katrina. In reality, the economy grew at a rate of 4.3 percent in the third quarter as a brief spike in gas prices to $3.05-per-gallon in early September declined steadily through December and now stands at $2.17-per-gallon.