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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: 8bits who wrote (59540)8/10/2006 3:59:33 AM
From: Elroy JetsonRead Replies (2) of 306849
 
Let's see, the housing decline began in December 1989 and by August of 1990 Iraq invaded Kuwait.

There might be a connection. Maybe Saddam Hussein realized he was going to lose all of the equity he had built up in California real estate and decided his only option was to plunder Kuwait.

Then Iraqi forces were tossed out of Kuwait by coalition forces in January 1991. California real estate investors despaired, realizing that Saddam would not be purchasing additional homes in California any time soon. This caused the price decline to accelerate, finally bottoming out in early 1996.

In 1898 Southern California land and home prices collapsed ending a frenetic nine year upward spiral leaving prices little changed from nine years earlier, while bankrupting many who participated. **

At the time people blamed a two week interruption of railway service to California when a thunderstorm washed out a section of track in Arizona. This delayed through passengers by a full day. Bankers blamed the collapse of the boom euphoria.

But maybe the decline was really caused by the shelling of a village in Samoa in March of 1889, by a German naval force. In doing so they destroyed some American property. Three American warships then entered the Samoan harbor and were prepared to fire on the three German warships found there. Before guns were fired, a hurricane blew up and sank all the ships, both American and German. A compulsory armistice was called because of the lack of warships.

Home prices in Southern California may have already been falling, but certainly the U.S. military intervention in Samoa put the nail in the coffin.

One of the most interesting aspects of human behaviour is their ability to see connections and patterns which don't actually exist.

** "The Boom of the Eighties - in Southern California" by Glenn S. Dumke (1944)
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