In keeping with a proud tradition of misreporting on financial markets, the Post began a three part series on the housing bubble yesterday in which it defines the housing bubble as a story of bad subprime loans.

This is wrong. We had a housing bubble before the beginning of the subprime nonsense. The corruption associated with the suprime market extended the bubble, but it did not create it.

Competent economists were warning about the bubble in the housing market as early as 2002. It was easy to recognize because real house prices had already increased by more than 30 percent. By comparison, real house prices had remained virtually flat for the century from 1895 to 1995. No economist had any plausible explanation of this run-up, which is why it was possible to recognize it as a bubble.

Unfortunately, the Post does not like to present the views of competent economists. The most widely cited expert on the housing market in the Post in the years from 2003 to 2006 was David Lereah, then chief economist of the National Association of Realtors, and the author of Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them. (Available for 39 cents from Amazon.com.)

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