This Week's Dire Prediction About Home Prices

Time magazine this week finds house sellers in denial, refusing to drop prices despite the media's insistence that the bubble has popped. "The nation's median home price is still up 0.9% this year, to $231,000," Time says. "But that stat is misleading. There's a stalemate between buyers and sellers: property owners are reluctant to cut prices, and buyers are patrolling from the sidelines, hoping for fire sales."

What the piece doesn't point out is that stable median home price means that, by and large, the sellers are winning. The story also offers tolerable-to-good stats: David Lereah, chief economist for the National Association of Realtors is quoted as saying "he'll probably cut his forecast for price growth from 5 percent to 4 percent this year"—hardly a bust, but the story puts this figure in its litany of bad news.

The story also deploys puzzingly bright anecdotes to illustrate the agony of today's seller. "Some sellers figure they're lucky to be getting out," Time says, telling the tale of a Navy officer who sold a four-bedroom home in San Diego for $476,000 after spending $7,000 on the kitchen and dropping the price by $18,000. But a little math shows that even with the improvements, the poor guy cleared nearly $200,000 on a house he owned for four years. This kind of bubble we can live with.