Bubble mania bayareahousingreport.com
The Christian Science Monitor reports that, in June, the term "housing bubble" was used in American magazines and newspapers 312 times. That's a 600 percent increase from a year earlier, according to the Monitor. My suspicion is that we will see even more housing bubble stories in weeks and months to come. Because once the media latches on to some sexy or scary story, it just can't let go. I ought to know. Because I spent 20 years as a member of the so-called Fourth Estate. First with The Wall Street Journal. Then with The San Diego Union-Tribune. There's a tongue and cheek dictum among journalists: "Never let the facts get in the way of a good story."
Let me mention one story in particular. It recently appeared in The New York Times. The headline read: Be Warned: Mr. Bubble's Worried Again. The story was a lengthy profile of Robert Shiller, a shameless, self-promoting Yale economist, who claims to have caused the stock-market crash of five years ago, after a conversation he had with Alan Greenspan, in which Shiller supposedly put the words "irrational exuberance" into the Federal Reserve chairman's mouth. Anyway, Shiller is back for his second 15 minutes of gloom, as the Times puts it, just in time to promote an updated edition of his 2000 book titled, what else, "Irrational Exuberance.”
Shiller predicts that the housing boom is about to go bust; that it will cause a recession; and that housing prices could fall 40 percent over the next generation. And how did he arrive at his prediction? By unearthing rare historical housing data from other countries, according to the Times. The parallel Shiller sees to the U.S. housing market in 2005, is 16th and 17th century Amsterdam. Shiller goes all the way back to 1585, when workers in Amsterdam began to dig a canal through the city. It became known as the Herengracht, or gentlemen's canal, for the fashionable row houses that soon sprang up on its banks. Merchants moved into many of them, and the canal remains one of the city's finest addresses today. So Shiller tells us that home prices soared in the first half of the 17th century – that is, the 1600s. But they came crashing down in the 1670s, when the prime minister was killed, and partially eaten, by a mob of angry Dutch, and the Country nearly disintegrated.
Okay. So that's supposed to be a parallel to what's going on today in the Bay Area Housing market and other housing markets throughout the country. Well, you know that tells me? That we really needn't worry about the housing bubble until Alan Greenspan is killed and partially eaten by a mob of angry Yale economists, and the country nearly disintegrates into civil war over whether Brad should have stayed with Jennifer or moved on to Angelina. |
