Move over Robert Shiller. Shiller, the author of "Irrational Exuberance," and the authority on speculative bubbles apparently can hang up his hat. Blanche Evans in a Realty Times article explains the real reason behind current price declines- home buyers are meanies.
Previous to this, meanie buyers have not apparently been given serious consideration in speculative bubble studies. In a paper by Jose´ A. Scheinkman and Wei Xiong, they seem to indicate, as does Shiller, that the "irrational" component happens when prices are on the way up, not on the way down. Scheinkman and Xiong refer to this phenomenon as "overconfidence." When looking to other sources for an explanation for price declines, Evans quotes the Joint Center for Housing Studies of Harvard University’s "State of the Nation’s Housing 2006." They state that overbuilding and job loss are preconditions for metro area housing price declines. They indicated that between 1975 and 1999, the percent of times that overbuilding and major employment loss led to price declines was nearly 8.3 percent and 4.5 percent, respectively. Again, no mention of meanie buyers, but Evans offers her own explanation, buyer’s attitude- and she doesn’t find that attitude pretty.
