CEPR held their first Economist Office Hours. The low-key event was a big success, with attendees stopping by from all parts of Washington (and a caller from Washington State!). Refreshments were provided, and economists Dean Baker and John Schmitt fielded questions on issues ranging from the trade deficit to the French labor law protests. This event will be held again on the first Wednesday in May.
In the morning, Dean Baker visited the Hill to debate David Berson, Vice President and chief economist at Fannie Mae, about the future of the housing market at the invitation of the Congressional Economic Leadership Institute.
While Mr. Berson did not believe that there was a bubble in the nation's housing market, he did agree that housing in several markets is likely over-valued and could decline. He also noted the large increase in investor purchased homes over the last few years, as well as the surge in non-conventional pricing. Dean pointed out the unprecedented run-up in home sale prices, which cannot be attributed to any fundamentals on the supply or demand side. He also pointed out that there has been no substantial increase in rents during this period. If the run-up in home sale prices were explained by fundamentals in the housing market, it should affect the rental and sale market in roughly the same way.