Harvard on housing

From BusinessWeek:

Harvard University released its annual State of the Nation’s Housing report today. Among its conclusions: “Despite some stabilization in homebuilding and home sales in the spring, real home prices continued to fall and foreclosures mount in most areas in the first quarter of the 2009.”

Adds Eric S. Belsky, executive director of the Joint Center for Housing Studies at Harvard: “The best that can be said of the market is that house price corrections and steep cuts in housing production are creating the conditions that will lead to an eventual recovery.”

If I remember correctly, the Harvard Joint Center for Housing Studies was one of the bubble-blowers. Here's what they wrote two years ago:

Together with the enormous increase in household wealth over the past 20 years, healthy income growth will help propel residential spending to new heights.

The household wealth argument is a circular argument, because household wealth is strongly determined by housing prices and stock prices. As Rebecca Wilder recently pointed out, household wealth hasn't been doing so well recently.