Home Front

A blog about the economy and the Sacramento-area real estate market.

January 2, 2009
To all those who got it wrong
It used to be common among newspaper columnists to start the new year with confessions of the the mistakes they made in the previous year - or the predictions they botched.

  The Friday Home Front column kicked off 2009 in that sort of spirit - looking back at predictions made as the housing market was downshifting in 2006. We feature a lot of real estate experts who misjudged the extent of the downturn - and note that our own coverage was sometimes overly rosy, too, as a result.
 
  I haven't looked at comments to the article yet. But there's been some interesting reaction on the phone and e-mail. A couple by e-mail making the obvious point. (Both writers saw this housing mess long before it was accepted as fact, by the way).

"Few economists, and virtually no government agency heads or trade associations, stand to gain anything from telling the truth about economic downturns. In my opinion, the media should look at everything these folks say with skepticism, and stop according them the status of experts with superior knowledge and credibility."


"Look at the occupations of your so-called experts in today's article.  Every one of them either worked for the housing industry or banking which enabled the bubble to inflate and then burst.  They all wanted the bubble to continue inflating as it meant fat fees for them and their companies.  They are simply too biased to be relied on for the truth."


A caller suggested that this is why he's come to the conclusion that "conventional wisdom" is accurate about 10 percent of the time.

 "This is not a bitter conversation. It's more a point of philosophy," he said.


Another, still in the real estate business as a consultant to builders, suggested that it was difficult to accurately predict during this downturn because it was "unprecedented."


Another, a commercial real estate broker, said she still believes the media did this, by constantly looking for the bubble to burst and scaring people into not buying houses starting in 2005. She blames The Bee and said this column caused her to cancel her subscription - because we did not adequately blame ourselves.


And another, finally, a student of economics, pointed to Robert Schiller book, "Irrational Exuberance," that pointed out clearly years ago that the housing boom was unsustainable and would crash back to earth.


It had occurred to me a couple times as I researched today's column that there were early people saying we were going over a cliff with this housing boom. They were mostly bloggers and not mainstream "experts," predicting this was a disaster soon to unfold. Therefore, in the process that often leads to these kind of business stories, they seemed to have less weight than someone who sold houses for a living or financed them. (There's an MSM confession for you).


 But many of these seers proved correct.


 Everyone now is certainly more chastened by the immensity of this downturn - and seems less willing to chirp a company line. But the past is a lesson we'll try to take forward in our reporting this year. It's a delicate line, not wanting to be overly negative until there is reason to believe in its accuracy, yet not wanting to be overly positive if the facts aren't there. Usually it involves criticism from both sides, which is helpful in charting a tone as this continues to unfold.

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