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  "title": "Analysis of home prices in terms of weeks of work",
  "note": "This Wall Street Journal article has an interesting analysis of U.S. home prices in terms of how many weeks an average American would have to work to pay for the mortgage on a house or for the house itself. The conclusion is that houses are cheap and therefore should not fall further in value. Nowhere in this analysis does the author, Brett Arends, consider the employment situation. If median earnings for those who continue to be in the workforce remain the same but 2 million more Americans lose their jobs, that’s approximately 1 million mortgages that won’t be paid. There isn’t a lot of demand for new or upgraded housing from unemployed people, who ultimately will have to move in with relatives.\n\n[Note that stable wages for those with political power, but an ever-larger group of potential workers thrown under the bus is exactly what Mancur Olson predicted.]\n\nThe author treats Boston and New York City as anomalies, saying that because housing prices haven’t fallen as much they still might fall farther. To me, however, what distinguishes New York City from Miami or Las Vegas is that nearly $1 trillion of tax dollars have been sent to New York, a percentage of which turned into Wall Street bonuses, a percentage of which turned into demand for housing. Boston has an unusual number of industries that can survive the collapse of the rest of the U.S. economy, e.g., universities that can admit foreign students, biotech firms that develop drugs for world markets, and multinational high-tech firms such as EMC.\n\nIs a house in Michigan cheap? Not if the number of houses exceeds the number of jobs. In that case, the value of an extra house is $0.\n",
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