Blast From The Past

Since people are fond of arguing that real estate never goes down in value, especially here in the Bay Area, try this blast from the past on for size.

Some choice quotes (sound familiar?):

"One reason housing prices fell so much in the Bay Area after 1989 was precisely because speculative excesses drove them to fanciful and unaffordable levels."

""The inflation of housing prices was just something we couldn't economically sustain,'' said Jim Hines, manager of Gibson Properties in San Jose. "Prices were going up 10 to 15 percent a year. When you have three or four years of that, somewhere it's got to stop.''"

"And it stopped for lots of other Santa Clara County residents after jobs began drying up in 1990 when the recession clobbered California. Homes in one part of San Jose, just south of Milpitas (zip code 95133), plunged nearly 17 percent over the past five years, including a 3 percent slide last year. Even affluent Los Altos and Los Altos Hills (zip code 94022) saw home prices fall 11 percent over five years, despite rebounding nearly 4 percent last year."

""In the 1970s and 1980s, people were looking at housing as an investment, a place to make money. Now they look at it as a place to live and raise a family, not as part of their portfolio.''"

And it is only worse this time around.