In the summer of 2005, I lived in Orange County, Calif., home to one of the most overblown real estate markets our country has ever seen. A friend’s uncle was the CEO of a local subprime mortgage company that recently had gone public. I asked him a simple question: “Do you think we’re in a housing bubble?”
“Bubble!? You’ve got to be crazy!” he said. “Morgan, let me tell you something. I’ve been in this business for 20 years, and I’ve never seen real estate this hot. I’ve never seen people this excited about buying a home, and I’ve never seen it this easy for nearly anyone to do it. This is the dawn of new era, not a bubble!”
“Thanks,” I said, “you’ve just confirmed my suspicions.”
His company filed for bankruptcy 18 months later.
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