REPORTERS BEGAN TO NOTICE A HOUSING BUBBLE IN MAY, 2005 - But Nobody Really Listened!
MAY, 2005 WSJ SURVEY - 81% OF REPORTERS SAID WE'RE IN A HOUSING BUBBLE!
The main issue on the so-called bubble in the housing market is not whether there was one, and that it may have burst. It's that policymakers may have seen the bubble growing, and potentially bursting, but did little to stop it several years ago.
Although home prices in the Chicago Area did not peak until 2006, according to S & P Case Shiller Index Data, housing activity as defined by sales of new homes nationally hit a peak in July, 2005. At the same time, shares of the biggest regional and national home builders were at their highest levels.
An Internet search via Factiva.com revealed 268 stories in U.S. Newspapers in 2003 referring to a housing bubble. The number of stories increased to 369 by 2004, and ballooned to 1,608 in 2005. A month-by-month analysis of that year indicates a steady growth in stories describing the "Real Estate Bubble" through June, when the number of bubble stories hit a peak.
No one is saying that journalists "made up" the bubble. As we all know, the job of reporters is to REPORT on what people they speak with say, not to make things up on their own. Likely, in mid-2005, many interviewed had concerns about the housing bubble. Indeed, many of our Team clients began to be concerned about the bubble effect about that time, as we recall.
In the June, 2005 Wall Street Journal Survey, 81% of reporters questioned thought their was a housing bubble in the U.S., and most thought that bubble was growing.
But nothing was really done at that time. Was this simple optimism, ignorance - or a bit of arrogance?
See Justin Lanhart's post on the Wall Street Journal Developments Blog, from November 18th, for his take, as well as a bar graph tracking instances of housing bubble stories in the media, tracked monthly, between November, 2004 and April, 2006.
DEAN MOSS & DEAN'S TEAM CHICAGO
