To listen to many pundits and the media, housing was a sure bet to implode long ago.
In late summer 2001, Business Week magazine was cautioning that "a housing bubble may be developing." In July 2002, a Wall Street Journal personal finance columnist warned, "Dumping Stocks for Land? That May Be a Big Mistake."
The current issue of Fortune magazine has a cover story on real estate speculators getting rich buying and selling houses in rapid succession. None of them seems to have taken to heart the magazine's 2002 cover story, which said: "U.S. housing prices are stretching the outer limits of what's reasonable and sustainable.... In a year or two, prices will fall with a thud."
When that didn't happen, some people got tired of waiting. The website www.housing-bubble.com hasn't been updated since mid-2003.
Others have accommodated themselves to the current reality.
A widely followed University of Michigan consumer survey, released Friday, showed that 24% of respondents nationwide said it was a good time to buy a home because prices would rise. That was the highest percentage since 1988 -- right before prices peaked in the previous real estate cycle.
"These are powerful engines creating a boom in home sales, and all booms end the same way," Richard Curtin, director of the survey, said in a statement.
Three years ago, Phoenix Management Services, a turnaround firm based in Philadelphia, asked about 100 lenders in its regular quarterly survey if they thought there was a real estate bubble. Voting yes were 58%, and 29% said no.
A few months ago, Phoenix asked the question again. Despite the last three years of zooming prices, 46% of the lenders said it was a bubble, and 39% believed it wasn't.
"They're saying, 'This isn't a bubble -- this is here to stay,' " said Phoenix Managing Director Michael Jacoby. "That's really scary."
It's possible that something fundamental in the nature of real estate has shifted over the last three years, powering the growth while tamping down the risks.
Irvine real estate consultant John Burns told the Los Angeles Times three years ago that "we're in a mini-bubble." He added that if the market continued to grow by double digits for more than a year, Orange County "will get to a point where home prices are no longer sustainable."
The median price in the county then was $317,000. Last month, it hit $576,000. But Burns no longer thinks there's much risk.
