A gem! Extracts from the 1907 San Diego book relating the 1880s boom (the first of many bubbles to be seen, including the last one that just ended in 2005):

Land advanced daily in selling price, and fortunes were made on margins. A $5000 sale was quickly followed by a $10,000 transfer of the same property, and in three months a price of $50,000 was reached. Excitement became a kind of lunacy, and business men persuaded themselves that San Diego would soon cover an area which, soberly measured, was seen to be larger than that of London. Business property that had been selling by the lot at $500, passed through the market at from $1000 to $2500 per front foot. Small corners, on the rim of the commercial center, sold for $40,000, and for the choicest holdings the price was prohibitive.

Then as now, psychology played a role:

Those who participated in these events and still live here, look back upon them with varying emotions. To some the memory is painful. “The boom,” says one; “Well, that was the strang­est thing you can imagine. There seems no way to account for it now, except as a sort of insanity. All you had to do was to put up some kind of a scheme and the people who came here would put their money into it by the barrel.”

Of course, as happened in 1979-80, 1990, and 2006, the party came to an end, and many greater fools were caught holding the bag:

The great boom collapsed in 1888, the first symptom of strin­gency in the money market coming early in that year. Those who were speculating in margins threw their, holdings upon the market, first at a small discount, then at any price, and before the close of the month of January, there was a wild scramble and confidence was gone. The establishment of a new bank in March did not have any immediate effect in restoring confidence. “Save yourself” was the sole thought of those who had been foremost in the gamble for the “unearned increment.”

What were the net results of the great boom? To a few indi­viduals, pecuniary profit; to many more individuals, loss and disappointment; to the real estate market, years of stagnation.

The boom, of course, would not have been complete without the David Lereahs of the day:

Of the literature of the boom, it would be embarrassing to even attempt to describe it in all its richness and variety. The best writers in the land were brought to San Diego and gave their talents to the service of the real estate dealers. One of the ablest of these writers was Thomas L. Fitch, known as “the silver-tongued orator.” Mr. Fitch easily outdid and outdistanced his fellow scribes in the glowing fervor of his panegyrics upon bay and climate. To this day, the old San Diegans break into sunny smiles when yon speak of Fitch and his boom literature.

Steve, back then, they thought that SD had just been “discovered” and that there was no limit to how valuable land would get. They were painfully disappointed, of course.

What we have today is very similar, only the magnitudes are somewhat different: 10x appreciation in 3 months in the 1880s compared to 2x appreciation in 4 years in the 2000s.

Many of today FBs’ grandchildren will probably one day say what you said today about past idiocy: “Grandpa, your house value doubled in 4 years, with no fundamentals driving it, and you still thought it could only appreciate more??? What were you guys smoking in 2005???”

I was having a conversation with a realtor last week about prices and whether they would go down. He was a believer that prices in Coronado would not go down and that any previous downturns in price would not happen again. He said, “Coronado was discovered in 1998.” Prices started going up then, of course. I did not say it, but I was thinking that the rest of San Diego had been discovered then as well, as prices started going up everywhere.