David Streitfeld Knows Better than This
The NYT moves deeply into delusion:
The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune— economically diversified cities where the boom was relatively restrained.
In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix. [emphasis mine]
Putting it politely, that is h*rs*sh*t. Anyone who was paying attention in the Atlanta area—or who has been paying attention to Georgia Bank Failures—has described the Greater Metro Area’s housing prices (let alone Atlanta itself) as a bubble. (As I noted at the link above, one of our commenters, Nancy Ortiz, was all over this in June of 2009; and the old Business Week covered it in an article published in October of that year. Does the NYT believe that local banks fail for no reason? As Peter Carbonara wrote in the BusinessWeek piece:
One Material Loss Review released today, for example, describes the death throes of FirstCity Bank, which had $297 million in assets and was based in Stockbridge, Georgia, a town not far southeast of Atlanta. FirstCity, like many other banks in the metro Atlanta area, partook of the state’s late, lamented enormous real estate boom, making a large number of loans to local builders. When the boom turned into a crash in 2007, those loans turned bad. The bank failed on March 20. [emphasis mine]
Minneapolis is another clear case where the locals were talking about a bubble back in late 2006/early 2007. Commenter TrickStar was all over Minneapolis at Barry Ritholtz’s place it in November of 2008. (Indeed, by March of 2010, the S&P/Case-Shiller Index was claiming a “recovery” for Minneapolis [link is PDF]. Talk about “green shoots.”)
That same PDF&again, from 11 months ago, using January 2010 data—discusses Seattle, which had the fifth-largest drop in housing prices during 2009. And that was over a year ago. As the Seattle Bubble blog noted, things only got worse last year.
SEATTLE UPDATE: Even David Leonhardt piles on. Hint to the NYT: Institutional Memory is an Asset only when used. If you need someone to run your Knowledge Management division, give me a call and we’ll talk.
In short, anyone who was paying attention knew that all three cities were prime examples of housing bubbles. The idea that the NYT’s best economics writer doesn’t is frightening at best.
To riff on a phrase from Brad DeLong, Why Can’t We Have a Better-Informed Press Corps?