Although Hurricane Sandy is considered this election’s October surprise, there is another one: The national housing crisis, which has defined the national economy for the past half-decade, is over. That’s not an automatic boon for President Obama, though. Instead, it’s an illustration that politicians can’t fix everything. Some problems need time — and free-market forces — to fix.
The 2008 election was all about the housing bust. Americans knew they were in trouble as early as 2007, after housing prices had stagnated and then fallen for a year. They could no longer take equity out of their houses to keep up their consumer spending — a looming disaster for the economy, which depends on such spending. But few inside the Beltway noticed until fall of 2008, when falling home prices caused a financial crisis for Wall Street.