The Stalwart submits: On CNBC this morning, I caught yet another economist predicting that real-estate wouldn't crash or even go down, but instead the hot market might just cool off. This line gets repeated so often that most people are probably willing to accept it without much thought. In fact, there's are many reasons to think the opposite, but that's not what this entry's about.
I wonder how much these well-paid chief economists and consultants are reluctant to call for a major correction in real-estate because they themselves have been major beneficiaries of the run up. If you're working in New York, at some investment bank, then it's likely that you've seen a major increase in personal wealth simply from living in your condo or loft. If you were in this situation, and a huge chunk of your assets were tied up in your property, you'd probably be less than inclined to call for a big drop.
Given that the personal holdings clouded the judgment of many analysts during the dotcom bubble, this would seem to have precedent.
Do academic economists, not on Wall St., have a different viewpoint considering their likely difference in salary? Offhand the only one I can think of is Yale's Robert Schiller who is definitely negative on real-estate prices.
On CNBC, whenever an equities analyst is interviewed, they always put up a screen showing possible conflicts of interest. Next time an economist comes on to talk about real-estate, I'd like to see "Owns loft in Tribeca" with a checkbox next to it as one of the possibilities.
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