Houses Not Special Property Anymore

I am not a resident of the American continent but I think that the financial crises has clarified a point that beautifully illustrates the value of first principles in economics and how markets function. While there is understandable argument about the causes and the trajectory of the causative factors, what is clear to me is that the big myth and fallacy that housing as a category of property is not subject to downward price fluctuation has been shown to be untrue. David Streitfield of the NYT files a report whose basic argument is that the magic of house ownership as a sure and superior form of property is being painfully revised.

It states that the belief was reinforced by the fact that for more than a whole generation, real returns on housing were sufficiently high. This allowed many US citizens to take mortgages from which they would build household wealth due to price appreciation. Dean Baker of the CEPR buttresses the argument with the estimate that it will take at least two decades to recover the US$ 6 trillion in wealth lost since 2005. In other words, there is a surfeit of houses and making money out of homes is highly improbable.  Demand and supply do rule but those with an interest in selling houses and whose income comes from selling houses will obviously try to convince people that housing is a special category of property.