July 09, 2012
The Post had a major front page article about how subprime loans threaten to undermine the prospects of African Americans for a decade. While African Americans do face discrimination in lending and are more likely to be given a subprime loan than whites with comparable credit and employment history, the real problem stemmed from the fact that so many bought homes in the middle of a housing bubble.
If someone bought a home at a bubble-inflated price that could be twice as much as its trend level, it would have a devastating impact on their finances, regardless of what type of mortgage they had. The big problem was that just about everyone in a position of authority was denying that there was a bubble and in fact helping to promote it.
For example, the Washington Post’s main, and often only, source in articles on the housing market was David Lereah, the chief economist at the National Association of Realtors and the author of the 2006 best seller, Why the Housing Boom Will not Bust and How You Can Profit from It.
Another popular source for major media outlets was the Joint Center for Housing Studies at Harvard University which felt the need to dismiss evidence of a housing bubble in its 2003 report on the state of the housing market. While many homeowners may have suffered as a result of taking the Harvard Center’s advice seriously, unfortunately the media does not consider its track record important. It continues to be used as a main source of expertise on the state of the housing market by major news outlets such as National Public Radio.
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