Economist Robert J. Shiller writes in the NYT:
How Tales of ‘Flippers’ Led to a Housing Bubble
By ROBERT J. SHILLER MAY 18, 2017
There is still no consensus on why the last housing boom and bust happened. That is troubling, because that violent housing cycle helped to produce the Great Recession and financial crisis of 2007 to 2009. We need to understand it all if we are going to be able to avoid ordeals like that in the future.
But the explanations for what happened in housing are not, I think, to be found in the conventional data favored by economists but rather in sociologically important narratives — like tales of getting rich through “flipping” houses and shares of initial public offerings — that constitute the shifting mentality of the era.
I don’t doubt that shows on TV about flipping houses played a role. But isn’t it striking that after almost a decade: “There is still no consensus on why the last housing boom and bust happened”? It was the biggest news story since 9/11, and yet Dr. Shiller himself, perhaps the leading housing economist, is still pretty hazy on how it happened.
I would suggest that one reason economists are still so baffled by what happened is because one obvious partial contributor to the fiasco — immigration / diversity — is a Sacred Cow. So without grappling with things like the Bush Administration’s Ownership Society and anti-downpayment, anti-documentation Increasing Minority Homeownership initiatives, you can’t get close to the full story.
But it’s safer, careerwise, to remain puzzled, so they do.