In 2002, Business Week talked about “Real Estate’s Bubble Cities“.
Barron’s said it’s a better time to be “a seller rather than a buyer”.
But, 2002 wasn’t the bursting of a bubble. Prices didn’t start to fall until three years had passed from those piece’s respective publication dates. And when they did, prices fell for reasons not even named in the articles.
Being right isn’t what earns a person credibility — it’s about being right at the right time and for the right reasons.
Lane Bailey says:
If you say the same thing for long enough, you have a great chance of being right. I could say that oil will hit $200/barrel. It will. But, it might not do it for 30 years…
December 12, 2007 — 12:37 pm
Robert Kerr says:
“They Were Wrong About The Bubble And They’re Wrong About This, Too”
What is “this” that they’re wrong about?
December 12, 2007 — 10:58 pm
Dan Green says:
Ha. I rewrote this piece a few times and must have edited out my original point.
“This” = the death of the mortgage industry and/or mortgage financing.
December 13, 2007 — 5:54 am
Robert Kerr says:
I don’t agree with either of your main points: 1) that sounding the warning bell early is the same as being wrong or 2) being wrong in the past implies being wrong now.
Anyway, thank you for the clarification of “this.”
December 14, 2007 — 9:34 am
John Wake says:
Robert, I hate to tell you this but the dreaded NAR was a lot more accurate in their forecasts during the up market than the perma-bears like Mark Zandi at Economy.com who is mentioned in the Business Week article.
The perma-bulls are more accurate in a bull market and the perma-bears are more accurate in a bear market. You have to decide who is right.
December 14, 2007 — 1:34 pm
Robert Kerr says:
C’mon, John, there’s no expertise involved in simple extrapolation, which is all the NAR ever did.
The real talent (IMO) is seeing down the road and anticipating the changes.
I don’t agree that being early is necessarily being wrong, especially when Greenspan changed the rules in 03 with Fed rate cuts all the way down to 1%. Had the Fed showed restraint, no doubt the downturn would have arrived earlier.
If you want an example of being dead wrong, the ex-Chief Economist of the NAR published a book in early 2006:
“Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market.”
December 14, 2007 — 6:43 pm
John Wake says:
Oil was overpriced at $50 a barrel. Now it’s twice as overpriced at $100 a barrel. Knowing oil is overpriced is worthless if you don’t know when the price will correct.
Perma-bears will always exist. It’s not an economic philosophy, it’s a personality trait. They are the same people who, if you offered them a steal, would say, “It’s too expensive,” “It would have sold for a lot less a few years ago,” “The owner only paid $Y!”
If the perma-bears are so smart about economics, how come they didn’t predict the biggest dang boom in residential real estate prices in American history?
They aren’t economists, they’re perma-bears, like NAR is a perma-bull.
December 14, 2007 — 11:12 pm