Bubble, Bubble, Toil, and Trouble

Uh-oh. The housing bust is just beginning.

By Daniel Gross
Posted Friday, March 2, 2007, at 5:23 PM ET

As the housing boom comes to an increasingly ugly end, the parallels between the real-estate industry today and the technology industry in 2000 and 2001 are astonishing. Blogger Barry Ritholtz last month posted eerily similar charts of the NASDAQ composite index in the tech-bubble years and the index of housing-related stocks in the real-estate-bubble years. Both show rapid rises, a swift correction, and a subsequent rally when analysts and insiders proclaimed (prematurely) that the worst was over.

Echoes from 2000 can also be heard in the continual false calls of a market bottom. The Web site Minyanville has documented the repeated bottom-calling attempts by National Association of Realtors economist David Lereah. Lereah believed the housing market had stabilized in March 2006 and again in April, June, October, and November.