May 08, 2013
Fed-induced housing bubble? Flip a coin
08 May 2013
Posted by Andrew Kantor
You may notice that we don’t run certain types of stories very often here. For example, "Experts predict…" pieces. Why not? Because expert predictions about economic matters are nonsense.
Take a story appearing today on DSNews.com, "Experts See Risk of a Housing Bubble Resulting from Fed Policies."
Reading the story, you learn that a recent poll by Zillow found, essentially, that about half of the "real estate experts" thought the Fed’s policies posed little or no risk of a housing bubble, and about half felt there was "moderated to high risk" of a bubble." (Technically, 4% said no risk, 48% said little risk, and 48% said moderate to high risk.)
Put another way, flipping a coin would be just as accurate as asking a "housing expert."
Then it went on to ask those experts to predict housing prices out to 2017. ("A cumulative rise of 22.3 percent is forecasted [sic]," if you’re interested.)
In the March/April 2005 Commonwealth, with a headline of "No boom, no bust, no bubble," we cited four big-league economists — including Michael S. Miller (chair of the DePaul University’s department of economics) and then-Federal Reserve chair Alan Greenspan — saying there was no housing bubble.
If experts can’t see the volcano they’re standing on, I really don’t expect them to be able to tell me what’s gonna happen in three or four years.
Bottom line: That’s why you’ll rarely see prediction stories appear here — unless they’re particularly interesting.