That’s gonna be a good article when all the parts are finished. As a homeowner who bought my first place in 88 I remember the buzz and all the talk. Very similar to what’s was happening in this bubble. I watched my home soar in value it went up 40% in the first 6 months I was in it. It nearly doubled in price by 1990. Many of my neighbors refi’d and pulled out cash for cars, pools and stupid stuff like one hot young wife that just had to have a boob job.

Then slowly the market turned and I watched the foreclosures start and the for sale signs started to pop up everywhere. It took 2 or 3 years but lots of folks lost thier homes, the neighborhood went to hell and the homes went right back to the 1988 values and stayed there for several years.

This is like Dejavu, only this time I’m waiting for after the crash to buy. The big difference this time is the amount the homes have shot up. They did not go nearly as high last time (at least not in my area). I still think they will come back down to prebubble levels or close to it. But like the last time I fully expect it to take a few years to happen.

Since we are looking back here is an article from Aug 1990 (*cough* 2006*)

A Post I did on my website last year:

Let’s revisit the past from the present

I emailed a writer over at LA Times today. I am glad we can say the same things 16 years later and still be in the dark!

“Hello I liked the article written by you. There is just a funny note I thought I’d point out.

Your article stated:

“One hopeful factor is that the state’s economy is much stronger and more diversified than it was 15 years ago, when the aerospace industry was downsizing with the end of the Cold War.”

http://www.latimes.com/business/la-fi-rents19oct19,1,7405522.story?coll=la-

Now for an August 1990 NY Times article.

“In the view of many real estate agents here, the slump is nothing more than a temporary cooling. Californians continue to recite a litany of factors they think will keep the housing market from going into a steep dive, including the state’s diversified economy, widespread restrictions on building that have limited the supply of housing and its strong population growth. Early census figures show that the state’s population has topped 29 million, for an explosive 23.7 percent rise in a decade. ”

http://query.nytimes.com/gst/fullpage.html?res=9C0CEFD6133BF9

That article could be written today. I think the obvious is going to occur when this economy is much of housing.

John”

If he emails back I’ll post his reply

Update 10-28-06: The LA Times writer hasn’t replied. What would he say to that anyways?

History repeats itself.

“…but this time is different!”, says the peanut gallery.

Yes it is. This time:

– Interest rates can’t go lower
– Layoffs are more likely to increase
– ARM’s have run rampant
– Toxic loans are more prevalent than ever
– Interests will more likely go up
– The economy can’t get any stronger
– Debt has been leveraged repeatedly
– The NAR actually expects a decrease in home price
– People have negative equity and zero savings
– Did I mentioned interest rates?

Everything people use the defend the economy and show it’s strength are the actual weaknesses that will drive this thing harder into the ground once the “credit tsunami” reaches land.

It amazes me time and time again that people forget about the early 90’s. Or simply say “It’s ‘different’ this time”. Economies go through cycles. No ifs ands or buts. This one is just going to be worse than the 90’s because of Greenspan postponing a needed correction by lowering interest rates too far during the dot-com bust.

Regardless, it’s nice reading about history and how much it mirrors what is happening today. Great find, thanks!

Very interesting articles. I was in LA all those years, but I did not know so many things happened. I was young. If everything was true in the articles, then we are walking the same path nowadays.