Among the people I knew who started worrying about the housing bubble in the early 2000s, Dan Gillmor’s warnings were the loudest. On his blog, he frequently and publicly fretted about what he saw as a disaster in the making, especially acute in California, where he lived. For whatever reason, I got the urge today to go back and look up some of Dan’s old posts warning about the bubble.
This thread in particular is a doozy. In it, Dan criticizes this Orange County Register story as irresponsible for containing no skeptical or cautionary notes and featuring a nut graf like this:
Martin Fonseca, a high-school dropout, can spoil his kid and not because he climbed the professional ladder. The sole source for the dramatic difference in this immigrant family’s lifestyle is the riches they amassed owning a Santa Ana home.
It’s a story of wealth creation played out countless times across a county where the local median home price doubled in a mere four years to more than half-a-million bucks.
It’s like watching the Titanic depart. The most striking thing about the thread is the comments, like this one from Charlie Prael:
Y’know, I’d be more concerned if this wasn’t the (third? fourth?) time that the Collapse of the Great California Housing Bubble had been predicted. Remember the late 70s? Price CAN’T go any higher. They did. 1988? Nope, nobody will pay THOSE prices. 1999? Samesame. …
Now, why am I cynical about this? Because the imminent collapse of housing prices in California has been predicted routinely for the last three years – always right around the corner, within the next six months. And it hasn’t happened. Nor will it, for the structural reasons above.
Of course, Mr. Prael’s memory was faulty. California’s housing prices had gone through significant bubble-and-bust swings in the ’90s, as you can see here.
What scares me most is the stuff like this: “Dan, please STOP advocating a real estate crash here in Northern California. It’s not befitting someone of your position in the journalistic community to be arguing in favor of depression and despair.”
Our ability to close our eyes and stick our fingers in our ears in moments of impending crisis is truly remarkable.
One comment
I remember thinking the same thing reading Paul Krugman during that time, especially his column where he argued that the American economy consisted of buying and selling each other houses with money borrowed from China.
I was party to a house purchase in early 2005 – it’s complicated, but I picked out a house which my mother-in-law then bought as an investment property, which we lived in – and I have to confirm that it was in-sane. I tried to talk my wife and mother-in-law out of the whole mess, on the grounds that none of us had any reason to own a six-bedroom house in a marginal Philadelphia neighborhood that wasn’t even close to where we worked and went to school. It was like trying to swim up a waterfall.