UCLA economist on shaky ground
Regarding the story, “Dreary outlook on home prices,” Dec. 27:
UCLA economist Edward Leamer tells us, in regard to our real estate market: “When you’re sick, you need medicine for the disease, not the symptoms.”
Given his past predictions -- as recently as December 2007 that there would be no recession in 2008 -- one needs to question his diagnostic acumen and thus his proposed remedy.
He believes the disease to be rapidly falling housing prices and their attendant ill effects of foreclosures and “fire sale” prices.
This despite house prices that are still well above their historical relation to incomes and rents.
Having misdiagnosed the patient, he then goes on to propose a “cure” of government management of foreclosed and distressed houses as rental properties.
I have a better idea. Why not let the market work and allow houses to fall to levels supported by incomes.
John J. McDermott III
Claremont
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