With no formal economic training, Bill McBride founded his finance blog,… (Rick Loomis, Los Angeles…)
As housing prices soared, Bill McBride sensed a lie.
In 2005, the retired technology executive saw signs of the bubble everywhere.
He chatted up a woman at his gym who had bought a home priced at 10 times her annual income. He heard "spiky-haired" young mortgage peddlers preaching that "any equity in your home is dead money." And he read the data: How could homeownership hit record highs as household incomes stagnated?
McBride founded his finance blog, Calculated Risk, to warn the world about a looming housing market collapse. As his analyses proved increasingly on the mark, he gained the attention of notable economists and his audience grew.
These days, Calculated Risk has become a go-to source for Wall Street, the media, academics and anyone else looking for authoritative analysis of housing and the broader economy. When McBride makes a prediction — as when he called a housing bottom early in 2012 — the housing world takes note.
"If you only follow one economics blog, it has to be Calculated Risk," said James Hamilton, an economics professor at UC San Diego. "If you find yourself reaching a different conclusion from Bill about where the economy is headed, my recommendation is think again."
Although many economics blogs have ideological slants, Calculated Risk established a reputation as an objective source of commentary on an increasingly politicized topic. The blog's name — borrowed from that of a friend's boat — accurately implies an impartial, yet edgy, take on the economy.
But McBride himself has remained somewhat a mystery. Even while promoting his work, McBride shunned the spotlight personally. He wrote anonymously during the first years he blogged, which only heightened interest among a growing number of followers.
"He was one of the first people to stand up and, objectively, just by brutally falling back on the facts, just say that the emperor didn't have any clothes," said longtime reader Stan Humphries, Zillow.com's chief economist. "It was this deep mystery about who this guy actually was. I remember the first time I went and met him, it was like meeting Batman."
McBride, 58, writes Calculated Risk from his home in Corona del Mar. Although his surroundings are posh, he maintains a simple lifestyle. He has never been married. He is an avid hiker. Photographs of Yellowstone National Park and other natural wonders adorn his walls, but there are few other decorating flourishes of note.
A recent weekday afternoon found McBride in his home office in jeans and sneakers, briskly delving through the most recent auto sales numbers on his Dell desktop. Although McBride is best known for his housing calls, he covers all types of economic indicators including major releases on consumer confidence and employment data, as well as more obscure data points such as port traffic and architecture billings.
"He seems to work almost all the time," housing economist Thomas Lawler said. "And he actually follows not just reports on the standard data, but he seems to just follow an extraordinarily large number of indicators."
To keep track of all the facts, McBride said, he maintains about 50 Excel spreadsheets at any given time. Data is at the core of nearly everything written on Calculated Risk, whether McBride is covering news, making a prediction, arguing an economic point or mocking a newspaper headline.
McBride follows data sets with religious vigor, arising at 5 a.m. to blog the first economic releases of the day and continuing into late afternoon. Reflecting this rhythm, Calculated Risk is set on Eastern Standard Time, though McBride often credits living in California with helping him understand the housing market.
"I saw firsthand what was happening," McBride said. "A lot of those analysts, maybe living in New York, they live in their own little world. Maybe if they'd gone out to Brooklyn they would have seen it."
McBride grew up in San Diego, the son of a Navy fighter pilot. He studied chemistry at UC Irvine and later earned a master's in business administration there.
After retiring, McBride volunteered for Sen. John F. Kerry's presidential campaign, convinced that the Iraq war was initiated by the Bush administration based on manufactured data. It was while working on the Kerry campaign that McBride first gained an interest in blogging, he said. But rather than focusing on politics, he wanted to explore the main thing on his mind: housing.
One of McBride's first blog posts, in January 2005 — well before the housing bubble burst in 2007 — used a simple analysis of home price data, household income and mortgage interest rates to argue that home prices were overvalued 14%. The situation was probably "due to speculation or easy terms" that included no-money-down loans and adjustable-rate mortgages, he wrote.