When Mainstream Media Say "Flip This House," Don't.

With Julian Assange in the slammer, it's left to Dan Froomkin to find out the really big scoops:

You might not know it from reading the news, but the nation's housing prices are in free fall again…

But if there is coverage in the traditional media, most of it  is relegated to the business section — when this should be front page news, for every newspaper in America.

It's a big national story, and it's a huge local story, particularly in those 13 major cities where prices are officially in double-dip territory — with home prices that had gone back up now down again,  to their lowest levels since the downturn began. (Those cities are Charlotte, NC; Jacksonville, FL; Las Vegas, NV; Miami, FL; Nashville, TN.; Orlando, FL; Philadelphia, PA.; Portland, OR; Richmond, VA; Seattle, WA; Tampa, FL; Tucson, AZ; and Virginia Beach, VA.)

Dean Baker, co-director of the liberal Center for Economic and Policy Research, tells me the story isn't getting nearly as much coverage as it should — if nothing else because "as you see a drop in home equity, you also see a drop in consumption."

This is due to what Baker and other economists call the "wealth effect."

This is like Ben Bernanke's decision last week to grace 60 Minutes with his mug in an emergency effort to explain that the economy is in trouble. Even in a nation of numbskulls like this one, is there anybody out there who doesn't know real estate is still losing value? Zillow will pretty much tell the tale, unless you live in some U.S.-in-name-only place like Palm Beach or Iowa. Even the stateless peoples of New Amsterdam are hip to the continuing slide in real estate prices.

Froomkin, to his credit, doesn't offer any prescriptions. (But I will: The government should form an agency called For Lease and take over all properties with For Lease signs—and in needier areas, all the empty residential properties—to remove excess supply. It should use an infinite supply of money to do that.) I suspect the story has fallen into the B and C sections because a) it is old news and b) the story hasn't changed.

It's also probably a good sign that the decline-of-real-estate story has lost some of its luster. It shows that Americans are slowly waking from the delusion of the wealth effect Froomkin alludes to. It was never wise to factor your real estate wealth into incidental spending decisions. If you look closely at most sad foreclosure stories, you find two broad groups: people who bought at the top of the market and have seen prices drop below the outstanding mortgage balance; and people who bought long before the top and would now either own the property outright or be well above water had they not used their homes as ATMs.

With mortgage delinquency rates still above five percent, that's a lot of people suffering. But the lesson learned—the academic version of the slacker's insight that you can live in a car but you can't drive a house — is valuable.  To be land rich and cash poor is to try and live like a royal family on the skids, and the U.S. Constitution doesn't allow titles of nobility.