Quote of the day: The bubble hasn't burst

From the Wall Street Journal:

“If anything, I expect housing to be weaker than normal rather than stronger over the next decade. People who say this is a temporary story, there’s no real reason to believe anything like that.

“As a matter of policy I can’t see that we want people to buy a house in 2009 that’s 10-20% higher than it would sell for in 2011. In so far as the FHA was encouraging people to buy homes in bubble markets that were not deflated, that’s not good for the FHA and you didn’t help the homeowner. We didn’t do those people a favor.”

– Dean Baker, co-director of the Center for Economic and Policy Research. Baker points to the fact that homes are still priced 15 to 20 percent higher than they were in the mid-’90s, even after adjusting for inflation, as proof that we’re still in a housing bubble.

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