NEW YORK, NY June 17 (DPI) – In one of the more striking provocations by a major news outlet, NYTimes.com promoted a curiously unsubstantial report that residential home prices nationally have “returned to sanity” – and the premise triggered a wave of what-are-you-talking-about replies from readers.
The report, by a young (36 year old) economics writer named Neil Irwin, suggested that home values nationally have settled into a quiet, stable affordability. Headlined “After an Era of Ups and Downs, Home Prices Return to Sanity” the report begins with a less-than-convincing anecdote about a home buyer in Tampa, and then largely ignores the impact of near-zero interest rates on the housing market nationally. It ignores too the huge current bubbles in housing markets like Los Angeles, San Francisco, New York and Washington.
But Irwin blithely suggests we are returning to sanity. He writes:
In contrast to the periods of irrational optimism and pessimism, the market is settling into a balance in which buyers are comfortable spending what they can afford given their income and savings, but aren’t willing (or able to persuade lenders) to stretch beyond that.
Readers across the country found the mere notion of a “sane” market laughable, and responded with a collective rebuttal more convincing than the original article – which may have been intended all along.
The top five recommended reader comments following Irwin’s post after 24 hours:
This is not a well researched article. With the endless price inflation in SF, LA and NYC, how is this a return to norm? How about talking about how foreign buyers are artificially inflating the market with their all-cash purchases? Where’s the comparison to the Japanese’ real estate investment inflation in the 80’s and ensuing bust?
10 years ago, housing in LA was affordable. A young couple with a modest income could actually buy a house, not rent an apartment. Those days are long gone, and Mr. Irwin is over-generalizing trends in a vastly more complex market ecosystem than he reports.
A very disappointing article.Yes, let’s take an off-the-beaten track location in Florida and extrapolate it to all of America.
“Home Prices Return to Sanity”?
And where might this be?
New York, where mega $millions deals get announced almost every day, literally boggling the minds of writers and readers alike. Haven’t seen any home price “sanity” reported in NYC housing prices for years! Or in other record high places like Boston, SF, San Diego…? Or do you consider it to be “sanity” when a tiny, mediocre house costs north of $1 million almost anyplace desirable in the US or a NYC studio easily costs $500,000 to $2,000,000? ” Sanity” to WHOM? (Brokers, maybe)
“After an Era of Ups and Downs…”
Glad to learn that the recent era has ‘ups and downs”–prices have been pretty consistently rising for the last 2-5 years, and certainly in the last 1-2 years, in ‘normal’ housing, as well as skyrocketing mega $millions prices. Article are written daily about the high costs of housing, people having to move, and children staying with families since they can’t afford their own places. (Perhaps you missed these?)
And your chart suggesting that worker salaries have kept pace with rents over the last 5 years–especially in the last 2-3 years–is simply belied by all the other data, and documented articles demonstrating that rents have FAR OUTPACED renters’ (flat) incomes! This is especially true in NYC (even with affordable housing rules not lapsing) but is widely documented elsewhere!
This sort of Panglossian view of housing just seems at complete variance with what everyone else is writing.Are you serious? I guess you haven’t looked at housing prices in California.
Sanity? Take a trip out here, where most houses are being snapped up by shady Chinese money that is fleeing the corruption crackdown over there.
All cash, 20% over asking, and pricing out an entire generation of would-be American homeowners. And we’re not talking about mansions or trophy properties, either. Middle class neighborhoods are being bid up as well.
The American Dream? Our real estate market in CA is currently just being used as a haven for shady money fleeing corrupt governments.
To many readers this report felt like more a deliberate provocation of readers than a serious attempt to analyze the many disparate housing markets in the United States.
Wrote Stephen Clark: “Using the word ‘sanity’ to describe any marketplace is misplaced. Sanity? Insanity? Compared to what? True markets – with real transactions and real prices – are always driven by many factors, rational and irrational. I would be interested to hear what Irwin says when the U.S. housing market corrects or even collapses when interest rates finally rise, as they must. Near-zero interest rates for the last eight years has created distortions around the globe – which itself is pretty insane. Even Crazy Eddie knew mental health has nothing to do with it.”