The Annals of Publishing

Via the Economics of Contempt, here’s one book I’m glad I didn’t buy, David Lereah’s 2006 classic Why the Real Estate Boom Will Not Bust — And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market.

The author, it seems, is (or was) senior vice president and chief economist of the National Association of Realtors. The book was also blurbed by David Berson, chief economist at Fannie Mae, who said:

An important book, whether you agree with the author (as I do) that housing will remain an excellent investment or are convinced that home prices are poised for a plunge, David Lereah lays out a compelling vision of housing as a continuing positive investment — and how you can profit from real estate if you already own the home you live in, are looking to move from rental housing to an owner-occupied home, or want to use real estate as an investment.

Since the crisis hit, there’s been a lot of talk about complicated financial engineering and the ins and outs of different kinds of derivatives. But it’s worth recalling that at root there was a pretty basic and easy to understand mistake. We had developed an economy where, over a period of years, incomes were more-or-less flat and yet consumption was rising. Consumption was rising because people were going into debt. And people were able to go into debt because of rising asset price values. It was convenient for some people to believe that this was a sustainable trend but it was not, in fact, sustainable. The price of an asset like a home needs to bear some kind of relationship to people’s ability to pay for houses.