My boss at the time told me, "Property values will always go up in Fairfax County!" Can you believe that! Today, we see the same thing in gold, which will burst and burst hard, and take out a lot of "true believers" who thought they were entitled to riches, and now will blame the government - or even me, for saying the price is too high. When I saw a one-bedroom "designer ready" condo for sale in Pompano for $850,000 - with a $3000 a month condo fee plus another $1500 a month in property taxes - I realized that the silliness had gone on long enough. Huge condos were going up in South Florida, and Las Vegas, with no real idea of who would want to buy them or why. Cheaper because houses were smaller - rooms were smaller - and less lavishly appointed. We walked away from some deals like that. Why? In the 1930's, to stimulate home sales, banks were offering 10 and even 15 year mortgages, which most folks thought was a scandalous length of time. "Stock in XYZ company is going up, up, up! Others simply "walked away" from houses, or did deeds in lieu of foreclosure, or short sales. But for the most part, the cause of the bubble was a LOT of people making BAD FINANCIAL DECISIONS - buying houses that no one could afford, and not thinking to themselves, "Gee, maybe I shouldn't do this - after all, if I lose my job, how could I afford this?" To sell the condo, he had to bring $10,000 to the closing table. Why? "Oh," they say, "But everyone else was making money in the Reagan Recovery, why not me?" I recall, at the time, my boss telling me about a friend buying a home with a "$1000 a month mortgage payment! So prices remained relatively modest. - no doubt something his Real Estate Agent told him.

By Jesse Colombo . Those blue-collar middle-class jobs didn't go off to China - they went off to Wall Street. Again, our standards for homes were a lot lower back then.

To be sure, there were a lot of other issues at work as well. And on Wall Street, something called the "Junk Bond" was being touted, and a guy named Even people in their 40's were still in college then, and their parent's grumblings about housing prices tanking were probably blips on the radar. The word " parochial " has two meanings. And the steep rise in property taxes helped burst the bubble. Few heeded it. I'd better buy some!" But this represented a huge drop from the sky-high rates of the early 1980's. Ultra-low interest rates encouraged a borrowing boom in which commercial real estate loans at … Why were the effects not as severe as they are today? And a young Governor from Arkansas ran against an incumbent President on the platform of "It's the Economy, Stupid!" The Japanese asset price bubble (バブル景気, baburu keiki, "bubble economy") was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated.
Those who do not, are doomed to repeat it.
Real estate lending by commercial banks grew strongly during this pe-riod because it was expected to be profitable. I met a nice fellow selling foreclosure properties for Ford Motor Finance.

And by the late 1990's a lot of people were starting to figure this out - that income-producing properties were a great tax haven, and since they were attractively priced, were a good investment as well. Or take cars - people are in a buying frenzy right now, driving UP the price of used cars and allowing manufacturers to drop incentives. and won - What does that mean? Housing prices went up, over time, but not at any fantastic rate. How could they afford to live there?" As we have, from 1989 to 2009. And in some areas, it would burst harder than others.


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