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subprime and the crisis

Just thowing pebbles down a deep well. Story remains to me the perfect marker for tendency to confirmation bias.


"So, to recap, the subprime story went something like this: foolish borrowers borrowed and foolish lenders lent. The evidence appears to show that lenders did not change their behavior in order to hit the affordable housing targets that the government imposed on them. While the government’s programs to encourage affordable housing may have other flaws they did not, at any rate, directly cause the subprime crisis. Myth busted."

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Senior Contributor

Re: subprime and the crisis

  I had this sent to me awhile back from an architect and we thought that the numbers were a little off in regards to year over year starts, but avg sq/ft was about right comparing the East coast where he lives and here in the Midwest.


Fables of the Reconstruction The current bust in construction can’t be explained by a mid-decade boom in home building or house sizes.


  The federal government keeps data on new housing starts that goes back to 1959. It shows that over the past 50 or so years, the United States has on average added 1.5 million new homes per year. From 1998 through 2006, we managed an impressive nine-year run of above-average home construction. For the majority of those years, however, home building was fairly restrained. It also followed 10 straight years of below-average new starts, meaning that we were largely meeting pent-up demand for new homes. The 2003–2006 period was a bit crazy, with 1.85, 1.95, 2.07, and 1.82 million new starts per year. Still, the total of 7.69 million new starts during this period is by no means the busiest four-year spasm of postwar building. From 1970 to 1973, there were 7.88 million new home starts. That was followed not by a depression, but by a new boom in 1976–79 of 7.22 million new starts. Compare that to the pathetic construction market of the four post-2006 years when we started fewer than 4 million new homes. That’s the worst four-year span since record-keeping began. That span includes the only three years in which fewer than 1 million new homes were started. When the 2011 data are available, this year is likely to be the fourth.