Hindsight is 20/20. From what I can tell, the Case-Schiller index is back around 2005 levels, even higher in some cities like LA. [1] Should people start selling their houses?
Could you point out the hindsight? What's different since 2005, in my perspective, it that it is now clear that there has been no political will to let bad loans go bad (evidenced by the government's responses since 2009). If you expect that to remain the case, it makes sense to not sell. If you expect that to change, and that house prices should go back to their historical income ratios, then it makes sense to sell.
It's always easy to retrofit what can essentially be a lucky guess into a smart prediction after the fact. Whether you consider that guess to fit a plausible narrative doesn't always make it any less of a guess.
Fair enough. Maybe a personal anecdote about how a non-economist could find a housing crash plausible isn't the best evidence for the availability of signals that something was wrong with the housing market. I can go through the FCIC report [0] and annotate to demonstrate, but their conclusion was the crash was avoidable. I can pile on more sources if that's desired. It'd be more entertaining to watch 'What I Learned and (Un-Learned) at the Financial Crisis' by Mark Blyth.
I object to Sumner's choice of time points in his blog, as they leave out the peak, and the historical norm. To observe that an already abnormal market is only a little bit more abnormal after ten years serves his point, but misses the story. That might be my meta-critique of economics.
[1] https://en.wikipedia.org/wiki/File:Case_Shiller_indice_20_vi...