Blasts from the Past

Back in the .com madness, the talking heads on television were saying that Things Were Different. We had entered a New Economy and the old rules of economics no longer applied. Kind of like what realtors have been spouting over the past several years:

• We're running out of land!
• Home prices always go up!
• A home is the best invest you'll ever make!
• It's different this time, with baby boomers and low interest rates and blah blah blah
  

These types of statements are proclaimed by those profiting from any bubble. I'm certain that in the 1840s there were plenty of sources extolling the endless supply of gold in California, just ripe for the taking!

Things aren't different, of course, they never are. The laws of economics are pretty static, I'm afraid. This isn't the first housing bubble this nation has experienced, and the bursting of our current bubble won't be the first bursting either. In fact, this isn't the first time people have discussed real estate bubbles and bursts on the ol' Internet. Sorry Ben, but while the concept of a blog may be something new, the idea behind sharing this information online is old hat. (That being said, Ben's blog does provide many valuable bits of information and discussions.)

Just take a peak back through the old USENET archives, which you can do through Google Group's Advanced Search. Enter the search terms, like real estate investing, and specify a date range (say, around 1990 when the last real estate bubble graced our markets), and you'll find a slew of interesting posts, concerns, ideas, and articles. Here are a few random tidbits I pulled from a few searches back in the archive:

Housing prices going down in Silicon Valley (October 24, 1990)
Some properties in posh San Francisco neighborhoods have lost at least $100K each in value over the last six months, according to a twice-a-year survey by Coldwell Banker. Depreciation is 15 to 20% since April. ... The Southern California homebuilding unit of CalFed Inc. cut prices on $300,000 to $400,000 homes by 10% to 20% and surveys indicate expensive homes throughout the state are being cut by similar amounts. Fears of large-scale defaults by residential builders and homeowners have dropped the stocks of the biggest banks and thrifts in the state by 40% to 88%. "There's real hysteria here, like I've never seen," says Joseph Jolson, an S&L analyst.

Real Estate News Summary, Part 7 (November 21, 1990)
Builder advertises: $50,000 Price Reduction! Executive homes in San
Jose's Blossom Hill area from only $325,000. ... The soft real estate market spread from luxury and middle-priced properties to include three of the Peninsula's more affordable cities during the past 6 months, according to a new survey by Coldwell Banker Residential Services. Residential real estate in Daly City, San Bruno, and South San Francisco depreciated from 5% to 13.5% since May 1990. ... The University of Michigan reports that formerly strong real estate sites in California, such as Anaheim, Orange County, San Francisco, and Los Angeles now lead the list of the nation's riskiest real estate markets.

Hrm, it all sounds eerily familiar...

The image below shows some of the largest real estate busts in the past, and is taken from the CNN/Money article, Real Estate: When Booms Go Bust.