Bloggers Talk About the ‘Bubble’
When Ben Jones daydreams, he has visions of Alan Greenspan.
He fantasizes that on nights the Federal Reserve chairman gets restless, he wanders into his den to boot up his computer. But instead of monitoring overnight currency trading, Greenspan links to Jones’ interactive Web log, or “blog,” to check the pulse of the nation’s real estate naysayers -- those who see the housing market enveloped in a persistent bubble.
“Maybe he secretly logs on to see what people are thinking,” said Jones, an Arizona-based freelance writer. “I’ve had more than one person tell me it was addicting.”
Jones’ blog, thehousingbubble2.blogspot.com, is one of the more popular of a growing number of blogs providing news, data, commentary or reports about the sizzling housing market.
Since January, the number of sites related to real estate, excluding Realtors’ marketing sites, has jumped 19%, according to online market research firm Hitwise. Some offer consumer information and advice, while Jones’ and others are rampant with pessimistic musings about the nation’s housing boom going bust.
“It’s the best suspense novel you’ve ever read,” said Debbie Daly, a renter in Agoura who is a nonpracticing real estate agent and frequent contributor to Jones’ blog. “How it will end, I don’t know, but I’m riveted.”
Blogs in general have been gaining momentum for some time and gained a critical mass during last year’s presidential election.
The current outbreak of real estate chatter in the blogosphere seemed to follow a pattern identified during the election: A surge in media attention on an issue feeds consumer interest and vice versa, setting off a “buzz storm,” said Jonathan Carson, chief executive of Internet market researcher BuzzMetrics.
“It’s an extension of the water-cooler phenomenon,” Carson said. “But now people are able to find more influential and informed consumers” on the Web.
Rich Toscano is among the bubble bloggers. A computer programmer by training, he says he is obsessed with financial markets. He’s also a renter in San Diego, which had been one of the nation’s hottest housing markets until its home-price growth started easing this spring.
So it seemed natural for him to put his personal zeal to work on trying to figure out what is going on in his hometown, which he considers to be in a bubble.
Toscano then wanted to share his research with family and friends and eventually created a website, Professor Piggington’s Econo-Almanac for the Landed Poor, at www.piggington.com. Within a year, the site had attracted more than 700 regular viewers, he says.
“When I started, the idea that there was a housing bubble in San Diego was considered to be quite radical and was roundly mocked in the mainstream media,” said Toscano, who recently converted his blog into a fee-for-content site. “At this point, the idea of a bubble is accepted quite widely, and lately it’s reached a fever pitch.”
The fever may be most intense at Jones’ free site, created after his first bubble blog crashed in May from trying to handle its 20,000 daily hits. His latest site doesn’t run advertising and therefore he derives no revenue from it.
A self-described “economic activist,” Jones, 41, sees his mission as chronicling a seminal financial event, something future scholars can turn to just as historians today would read an anthology of letters written by Dutch tulip traders in the 1630s.
“In 100 years, economists may be studying the comments of this blog because this was a real-time skeptics’ log in the middle of a financial mania,” said Jones, who rents a house with his wife in Sedona, Ariz., and doesn’t own any real estate.
Jones’ fervor stems largely from his status as a casualty of the dot-com meltdown, when he was the controller at an Austin, Texas, Internet firm that he declined to name. He resigned in 1999 before the company went bankrupt, after he spent a stressful final year trying to convince his entrepreneur bosses that “companies really do need to make money.”
The housing market today “is just like the tech bubble,” said Jones, who holds economics and business degrees from Midwestern State University in Wichita Falls, Texas. “That’s why it’s a mania -- because people have forgotten the fundamentals.”
Not wanting his family and friends to forget, and in between writing articles for Southwest Brewing News, Jones started sending mass e-mails last fall with links to media reports and other housing market information along with his pointed observations.
When the e-mailing duties became too onerous, he created the website to simplify the process.
“This is my premise: Prices are out of whack and probably will fall. How big the correction will be is the question,” said Jones, who rents “because it’s cheaper than buying now.”
His blogging has struck a chord with many like-minded housing bears.
A recent posting by Jones questioning whether there were fewer buyers these days for Countrywide Financial Corp.’s mortgage-backed securities drew 40 comments in seven hours. Another, posing the question, “What will be the big housing story in 2008?,” attracted 125 responses, including one from a Philadelphia commentator using the online moniker “Dreaming of a home in ’07.”
Jones spends about 25 hours a week reviewing hundreds of articles, news releases, analysts’ reports and industry publications before deciding which to link to. Usually his selections are cited without commentary.
Sometimes he will offer sharp remarks, such as: “There is a lot of baloney being thrown around concerning condo conversions. Proponents would have you believe this is a benefit to aspiring homeowners.” He then excerpted a news report about the trend to turn apartments into for-sale condominiums. The citation prompted 74 comments from readers, with the majority in agreement with Jones.
Indeed, housing bulls rarely join in on the blog’s bubble discussion. But a recent post questioning whether the premise of Jones’ blog was misleading prompted a polite debate, with references to Fed interest rate policy, hyperinflation, Mexico’s peso crisis and the Austrian School of economic theory.
Jacqueline Doyle of El Segundo doesn’t mind discerning the sense from the drivel when she clicks on to Jones’ blog several times a week. For the most part, she finds the commentary and other postings great sources for educating herself about the housing market at a time she and her husband are looking to buy.
“It’s crucial to read the logic behind each side’s interpretation,” she said. “Bottom line, there are no unbiased comments with respect to the housing market.”
That’s the point of his website, says Jones, whose love of economics and market dynamics prompted him to found a club called Students for Free Markets when he was a college freshman.
“There’s a place for all in the discussion,” Jones said. “People feel they can discuss things on the blog in a rational manner. That’s what the topic deserves.”
Whether the housing bears like Jones will be proved right is open for debate. Until then, he will be waiting it out online -- and waiting for Greenspan to tune in.
“I’m looking forward to the day when this bubble isn’t an issue anymore,” Jones said. “Hopefully, not too many people will get hurt in the process.”
