profette_IHB
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<em>Excerpted from the San Diego</em><em> Union Tribune</em> <u>June 21, 1992</u>
Note the apt gastronomical metaphor:
“When the bubble burst in 1989, some home prices fell 10 to 20 percent, while the price of raw land dropped even more. End result As real estate analysts see it, local developers, builders, bankers, planners and home buyers all made a fatal assumption three years ago.
They thought the booming real estate market would continue forever. They set aside their Econ 1 textbooks, in which one of the first lessons is "Beware the economic cycle." Peter Reeb, a market analyst with the Meyers Group, reviewed the change in land values from 1982 to 1990 and discovered that prices did not rise steadily in the last decade, as some recall. Some years, the average price for an acre of semi-improved residential land -- that is, property almost ready for construction and hence the most marketable -- rose.
In others, it fell. Only in 1987, 1988 and 1989 did prices soar, doubling from $89,000 to $198,000. The average price now stands at $95,000 per acre and Reeb doesn't think it will recover even half its former, inflated value any time soon. "In a hot market, people can justify just about anything, and that doesn't always work," he said. Sanford R. Goodkin, veteran market analyst for developers, uses a gastronomical metaphor to describe the feeling in the industry. "The feeding frenzy resulted in a gigantic stomachache," he said.
"The marketplace is now pumping the stomach out." He remembers sitting in the board rooms of clients, asking them if they didn't think that it was time for the boom to end. "The builders just went into a feeding frenzy, where all logic, history, common sense and professionalism went out the window," he said. Profit motive But Goodkin said that in the '80s, visions of soaring profits dazzled even development veterans of past downturns.”
Note the apt gastronomical metaphor:
“When the bubble burst in 1989, some home prices fell 10 to 20 percent, while the price of raw land dropped even more. End result As real estate analysts see it, local developers, builders, bankers, planners and home buyers all made a fatal assumption three years ago.
They thought the booming real estate market would continue forever. They set aside their Econ 1 textbooks, in which one of the first lessons is "Beware the economic cycle." Peter Reeb, a market analyst with the Meyers Group, reviewed the change in land values from 1982 to 1990 and discovered that prices did not rise steadily in the last decade, as some recall. Some years, the average price for an acre of semi-improved residential land -- that is, property almost ready for construction and hence the most marketable -- rose.
In others, it fell. Only in 1987, 1988 and 1989 did prices soar, doubling from $89,000 to $198,000. The average price now stands at $95,000 per acre and Reeb doesn't think it will recover even half its former, inflated value any time soon. "In a hot market, people can justify just about anything, and that doesn't always work," he said. Sanford R. Goodkin, veteran market analyst for developers, uses a gastronomical metaphor to describe the feeling in the industry. "The feeding frenzy resulted in a gigantic stomachache," he said.
"The marketplace is now pumping the stomach out." He remembers sitting in the board rooms of clients, asking them if they didn't think that it was time for the boom to end. "The builders just went into a feeding frenzy, where all logic, history, common sense and professionalism went out the window," he said. Profit motive But Goodkin said that in the '80s, visions of soaring profits dazzled even development veterans of past downturns.”