bgates, are you referring to me saying, “I am 100% certain that this asset bubble will revert to its mean” Fascinating, it you have any doubts it will….Anyone who believes this asset bubble will not revert to its mean is clearly delusional. But hey, it’s different this time, it’s San Diego, we’re running out of land, the air is great, the sun always shines, the Fed will save the housing market…
San Diego’s housing bubbles go back t the late 1880’s. Read on :
“It was the coming of California Southern’s trains in 1885 which touched off the Great Boom of the Eighties. Buildings spread over the landscape, with “gingerbread” at every turn. San Diego’s population rocketed up to 40,000 in 1887. The price of downtown lots doubled and tripled over and over again.
In the spring of 1888 credit tightened and numbers of land speculators had to offer their holdings for sale, to pay off creditors on whose capital they had been operating. Their need to sell forced prices down, and shattered land values which had been artificially inflated by unrealistic speculation. A great “bust” followed the Great Boom. Ten thousand people left town in the first few months after the bubble broke. Houses stood deserted all over town. Public and private improvement works were suspended, making unemployment a pressing problem.”
So if you think at all, that this time is different, you are clearly deluded. The masses fall for it every time: on the way up, they think the prices will keep going up, or they will fall only a little bit and then stabilize and rise again. Finally, at the bottom, they are afraid to buy, fearful of further declines. They fail to use data and history to truly understand the market. I’ve spent enough time explaining asset bubbles, and given resources for exploring this further. It’s all in the archives, so I’m done with this topic. I’m done debating that this bubble will revert to a mean of 7x per capita income or 10-15 x annual rents… that’s a closed chapter. Anyone who thinks it won’t, probably owned tech stocks in 1999 or 2000.
The examples in your post were predictions, and of course they are often wrong. But don’t confuse predictions with economic and business and housing cycles which are repetitive and cyclical and don’t need predicting; they only need to BE UNDERSTOOD. Don’t confuse predicting with understanding market cycles.
nancy-soothsayer, you described perfectly the posts by davelj.