The Union-Tribune’s latest housing editorial, Rickety Market, is so misleading that I just can’t resist taking a few shots at it. Let’s dive right in at the beginning:
We’ve been hearing from so-called experts for at least five years now that the San Diego County housing market was going to crash any day, perhaps sending the economy into recession. They were wrong, and property owners have enjoyed the greatest, most widely shared expansion of wealth in the region’s history.
And we’re off to a good start with the classic strawman offered up by stubborn housing optimists, a group that I fondly refer to as “the permabulls.” The claim is an exaggeration, for one thing — I’d really like to see a five-or-more year old example of an expert predicting that the San Diego market was going to "crash any day."
Timeline aside, this oft-utilized but completely ineffectual argument misses the point of the early warnings on housing. Some experts did start raising alarms a few years ago. The typical message, however, was that prices were reaching unsustainable levels and were likely to eventually adjust back to their fundamentals. The fact that prices went even higher before finally turning down did not render these analysts "wrong," unless they had attached a premature timeline to their predictions.
In fact, the people who were wrong were the "so-called experts" (to use the UT’s smug phraseology) who insisted that home prices would never decline. And as I recall, the UT gave the "real estate never goes down" set a lot more airtime than they gave less optimistic analysts.
read more at voiceofsandiego.org
February 27, 2007 @ 3:03 PM
Nice work!
Nice work!
February 27, 2007 @ 9:29 PM
Stay on the schmucks’ cases,
Stay on the schmucks’ cases, Rich.
February 28, 2007 @ 10:23 AM
Septeber 25, 2002 UCLA
Septeber 25, 2002 UCLA Anderson Forcast:
“In addition, Thornberg notes that if current trends continue in the real estate sector—home prices continue to increase and growth in rental prices falls off—L.A. may well be approaching a real estate bubble.”
http://www.uclaforecast.com/contents/archive/media_9_02_1.asp
He was precicting LA not SD but socal is socal. It was out there 5 years ago and you all have to live with this wrong bubble prediction.
February 28, 2007 @ 10:34 AM
He was precicting LA not SD
He was precicting LA not SD but socal is socal. It was out there 5 years ago and you all have to live with this wrong bubble prediction.
Do you not get the difference between “may well be approaching a real estate bubble” and “housing will crash any day now?”
Really? Is it that hard to understand the difference between those two statements?
March 2, 2007 @ 4:49 PM
You’re making the same
You’re making the same mistake I see made over and over again. Confusing “there is a market buble in X” with “The price of X will crash immediately.” One is an observation of a market, the other is a prediction of future prices. Calling an asset bubble is not a prediction. Bubbles exist before they pop.
There were people describing Southern CA residential real estate as a bubble in 2002-2003. Those people were right. The fact that it took several years longer than anyone expected to pop does not change the fact that it was a bubble then. Prices were disconnected from fundamentals in the 2002 time frame. Since they did not correct to levels that fundamentals would support, by definition, a bubble existed.
Once a bubble exists, saying that it will pop is about as challenging as predicting sunrise. All bubbles pop. Predicting when is a lot harder, and the “innovation” in mortgage lending carried this thing a lot farther than anyone expected.
But that doesn’t change the fact that Socal Real Estate was in bubble condition back in 2002. It was. That bubble just got bigger than anyone expected before it popped.
–Shannon
March 6, 2007 @ 11:42 AM
I love the word permabull..
I love the word permabull.. I guess it’s part of winners psychology, where when you’re winning it feels like you’re actually controlling the outcome and unmodififed human nature causes dumb people to give themselves credit for all the wins and then use denial for the losses..
Most people have probably lost money gambling.. and the people that run these casinos know, the losers don’t really blame anyone.. they just say ”next time!’ and wash down a few cigarettes with coffee and alcohol… they harbor no ill will against the casinos.. I wonder what the conensus reaction will be if this housing bubble as we term it here, pops! Will permabulls start writing biographies?