Blast from the past:
Turmoil in the housing market has led to fears that home prices will drop precipitously, particularly if foreclosures force large numbers of homes onto the market in the coming year. Recently, these fears have driven financial stocks down and led to the government rescue of Fannie Mae and Freddie Mac. But the projected losses have been wildly exaggerated. Most Americans have not experienced any significant decline in the value of their homes — nor are they likely to . . .
But fears of a huge loss in home values for most homeowners — and especially for middle-income homeowners — across the United States, and fears of the devastating losses by financial institutions that would accompany them, are greatly overblown.
Oops! Not so much!
And I know Charles Calomiris from Columbia — really nice, super smart guy — but like many traditional economists, he got this one totally wrong.
I bet there is a ton of other published stuff out there that truly missed the mark . . .
Housing Collapse Ahead? Not According to the Data
By Charles W. Calomiris, Stanley D. Longhofer and William Miles
Washington Post, August 4, 2008; A11