It is one of the great mysteries of the modern age; why was so much of this housing bubble so obvious, so predictable, and yet so difficult to avoid. It is a comparatively simple matter to examine housing data and see prices diverging systematically from long-run trends. It is also straightforward to look at house price to income ratios and see that housing had become unaffordable for all but the most affluent. Yet despite these obvious indicators, Americans chose to ignore the obvious and instead believe the unbelievable; namely, that house prices could continue to grow in excess of 20 percent a year.

This mystery is all the more difficult to understand given the experiences of the stock market in the late 1990s. The parallels between the bubble and the recent housing fiasco are almost too obvious to highlight. However, given the widespread desire within society to believe the unbelievable, it is sadly necessary to state the obvious. In both bubbles, people were being asked to believe that economic fundamentals were no longer important; that there was something different this time, and that conventional ways of doing things were suddenly redundant.

However, ordinary homebuyers were not the only group to fail to see that the housing market was degenerating into a speculative mess. Journalists, particularly those working on local and regional newspapers, were also susceptible. No doubt, many journalists owned modest properties, and were elated when property prices started to rise. They wanted to believe, like so many property owners, that getting rich was merely a matter of holding on to an asset and waiting for it to appreciate. Given this strong desire to see prices rise, journalists often blinded themselves to obvious indicators of property overvaluation.

Wishful thinking can never overcome the realities of supply and demand. As sure as night follows day, the housing bubble popped, prices began to sink, and elation was followed with despair. Today, we are increasingly seeing newspaper headlines that should have been published five years ago.

Consider, for example, today's headline in the Washington Post "Housing boom tied to sham mortgages". The article recounts the activities of Phillip Hill, who "lured people to fancy cocktail parties in a $1.9 million mansion. He asked to use their names and credit histories in real estate deals, promising to make them rich. Most got $10,000 checks on the spot for signing up. By the time the scam unraveled, the credit of those participants had been ruined, hundreds of upscale properties had fallen into foreclosure and real estate prices had plummeted in some of this city's most exclusive neighborhoods. Hill is about to go to federal prison".

However, the article also points out that since 2000 mortgage related fraud has increased tenfold. Let us consider that statistic, it saying that mortgage fraud increased by 1000 percent in seven years. The growth in mortgage fraud makes the housing bubble look like a blip on the chart. So how is it that journalists failed to notice this explosion in housing-related crime? Why weren't they exposing the activities of people like Phillip hill back in 2002?

The answer is straightforward enough. They were too busy writing feelgood stories about the Washington real estate market. Rather than doing their jobs, they wanted to believe the unbelievable, ignore the obvious, and as a consequence failed to report the truth.