The Housing Boom And Bust, by Thomas Sowell

There is a lot that can be said about the problem of the housing boom and bust, and this book manages to discuss it thoughtfully and well, although it also does not overstay its welcome.  Having read several books by this author now, it is easy to see how he tailors the length of his books to the amount of material he has to provide, not puffing up books simply to make them longer as is the behavior of some authors.  The author certainly has a perspective when it comes to criticizing the actions taken by politicians who are both Democrats and Republicans that led to the debacle, but it is not strictly partisan in nature.  The author is also highly interested in nuance, pointing out that the problem with unaffordable housing is frequently the result of government policies that prevent land from changing use and being used for development, which leads to an artificial scarcity in land that drives home prices through the roof, as has happened in some areas (like Oregon) and the way that many government policies sought to deal piecemeal with one aspect of the problem of housing prices and the desirability of widespread home ownership without considering the larger costs and repercussions of such plans.

This particular book is a short one at just less than 150 pages of core reading material (along with a fairly substantial list of sources).  The author begins the book with a preface that sets the context of his thoughts, published in 2009, about the housing crisis.  After that the author talks about the economics of the housing book, looking at the history of home prices as well as the wide variation in terms of home values (and their increase) during the years of the housing boom (1).  After that the author looks at the politics of the housing boom and the way that leaders in both parties sought to promote home ownership as a goal for society as a whole (2).  This leads into a discussion of the housing bust and its concentrated effects in those areas where home prices had risen the most (California, Florida, Nevada, and Arizona) (3).  After that comes a discussion of housing mystiques and mistakes that have led to continued difficulty in understanding the economics of home ownership (4), and the last chapter of which looks at the past and future and seeks to present a sound roadmap to what should be done.

This book can be taken as evidence of Sowell’s concern with the lack of insight and knowledge that exists about economics in American society and its consequences on issues like home ownership.  The author manages to deftly untangle the politically explosive claims of racism that show instead the soundness of the banks’ approach at using credit score and net wealth as well as income and a knowledge of local areas in pricing home ownership.  The author also manages to soundly explain the way that when there are problems or “crises” in an area like housing, that governments seldom think of ways that existing regulations can be streamlined as they have been responsible for the crisis existing in the first place, even if that can be a profitable thing to do when so much land is set aside as being unable to be bought and developed in precisely those parts of the country where housing prices are the highest as well as the most volatile.  It would strongly appear, though, that the housing problem and a great many other problems in the contemporary world would be far less intractable if there was a more widespread knowledge of and awareness of economics among policymakers and the general public.