Wednesday, March 18, 2009
They had quite a party over at Jon Lansner's blog this week in celebration of his third anniversary writing about Orange County real estate and related matters.
Many of the early housing bubble-seers were there - Rich Toscano of Piggington.com, Patrick Killelea of Patrick.net, Paul Jackson of HousingWire, and Bill McBride of Calculated Risk. Jon asked me to participate but, unfortunately, I wasn't able to at the time.
It looks like it was a lot of fun, all based on four simple questions:
- Did you ever think it would get this bad. Be honest! Why?
- What role do you think blogging played in this cycle?
- Going forward, how may all these new sources of real estate info -- from blogs to real estate info site like Zillow, trulia, etc. -- change the housing game?
- When will housing bottom? Why?
Links to the four posts containing responses from each of the four individuals are provided below along with some thoughts from the party host.
- Blog Party! ‘People thought I was a complete nut job’ - Piggington.com
- Blog Party! ‘I thought the bust would be more gradual’ - Patrick.net
- Blog Party! ‘Plenty of people knew this was coming’ - HousingWire
- Blog Party! ‘I wasn’t pessimistic enough’ - Calculated Risk
- Blog Party! ‘Not sure anybody truly saw this coming’ - Jon Lansner
Honestly, I don’t think blogs played a very big role in what actually happened with the market. We all blogged our fingers to little stumps but for as long as market prices kept going up, people contrived a way to believe that it would last forever. The blogs helped to get the facts out there, and I’m certain they changed the mind of some people. But getting the facts out there doesn’t make much difference if the majority of people are hell-bent on ignoring the facts.Patrick on whether he thought it would get this bad:
No, I thought the bust would be more gradual, maybe flat prices for 10 or 20 years while incomes got a chance to catch up. I didn’t realize that the banks were essentially running wild, without regulation. The government really failed to police the banks during the last decade. I’m pretty shocked at how much corruption there was in lending practices, and at Fannie Mae and Freddie Mac.Paul on the new sources of real estate info:
I think this crisis has opened most consumers’ eyes to the fact that there needs to be a much greater degree of transparency in the process of transacting real estate — both in the primary and the secondary markets... Technology clearly has a role to play in the efficient exchange of information — not to mention disintermediation, wherever it makes sense. Think about what has taken place with travel agents in the travel industry, if you want what I think is probably a pretty good analogy of the winds of change now blowing through residential real estate in particular.For the most important question of all - when will housing bottom - who other than Bill:
There will probably be two housing bottoms. First residential investment will bottom. Residential investment is mostly investment in new construction and home improvement. This will probably bottom sometime in 2009. That also means the bottom for housing starts and probably the bottom for new home sales will be in 2009. That is the good news. The bad news is any recovery in sales will probably be sluggish because of the huge supply of existing homes, especially distressed properties (short sales and REOs). But for most homeowners, when we talk “bottom” we mean house prices. And the news for prices is still grim. Although prices might be near a bottom in some low priced areas because of the significant foreclosure activity, prices are still too high in mid-to-high priced areas. It is really too soon to try to call the price bottom for those areas. It is possible that prices might fall in some areas for a few more years.And finally, Jon on how he got started in all of this:
Late in 2005, I became aware of what was often called “Bubble Blogs” where the shakiness of the housing market was loosely debated. I say this because there was little debate about whether a bubble existed, it was simply arguments about how big the bubble was. And anybody who uttered a word suggesting there was no bubble was hammered. Like me. Apparently, trying to do journalism — providing both sides of an argument — didn’t sit well on some of these blogs.A lovely stroll down memory lane...