Editor’s note: Talk of a real estate bubble, brewing for many years, has spawned an assortment of real estate blogs devoted to bubble talk and statistical analyses. These bubble sites offer a counterpoint to industry data and mainstream media coverage, and have gained a following among consumers and industry analysts alike. Several “bubble bloggers” — some named and some choosing to remain anonymous — have shared their views with Inman News. (Read the intro to this series, “The rise of real estate bubble blogs.”)

Name: Patrick Veling

Work: Real estate industry analyst and consultant, founder and president of Data Strategies Inc., Brea, Calif. Veling reads several bubble-related blogs and participates in the bubble discussion.

Q: What makes you a real estate bubble believer, a bubble debunker, or bubble neutral?

A: I am bubble neutral because there are too many social and economic variables in the housing market. Supply is easy to quantify but the demand component is not. Demand rises and falls with prospects for appreciation or depreciation, mortgage rates, societal and demographic shifts. People have lost money in the recent run-up and will make money in the worst of markets.

Q: How do you define a housing bubble?

A: A housing bubble is an economic phenomenon in which housing values are fueled more by speculation than by the actual need for housing. If the market is or had been a bubble, the “slow hiss” we are hearing would have been a much louder “pop.”

Q: How does this definition fit (or not fit) the national housing market? Which regional or local housing markets have exhibited the most bubble characteristics?

A: The definition applies to all markets, but is based more on behavior of the participants than on the market itself. I do not believe this is characteristic of the national market, but is certainly an issue in some local markets that have been driven more by speculators than by the social need for housing. Markets like Phoenix, Las Vegas and some Florida communities come to mind. Other high-profile markets that I do not believe fit the definition include San Diego, Los Angeles and Orange counties, and Boston.

Q: Which bubbles burst? Which ones have deflated? Which ones are inflating? Which are about to pop?

A: Human behavior is not very predictable. If we could predict behavior with certainty, none of us would be taking the time to answer these questions, because we would have solved all of the world’s problems and be living in peace on an island I own.

Q: Are there any common traits among the bubble markets?

A: Yes. Fear of not getting in, and fear of getting out too late.

Q: What is your best evidence for or against a housing bubble?

A: Seeing dire predictions of the last four or five years not coming true (and we have the statistics to prove it.) I read bubble blogs daily, and the same posters have been making the same arguments for years. It’s the “you just wait” syndrome. Meanwhile, while waiting, they have lost out on all kinds of opportunity to participate and benefit. But, if you continue to predict something long enough, it will eventually come true. Prices will mitigate and they will claim victory. More bearish observers will also claim victory when 50 percent price drops do not occur.

Q: Is it possible to accurately identify the existence of a bubble before it is gone? Explain.

A: It is not possible, because you cannot ascertain the end without historical statistics showing the trend has reversed.

Q: How are bubbles born and how do they die?

A: Bubbles are born of fear and die by confidence of the economic players.

Q: Why do people get so fired up about the concept of a housing bubble?

A: Nearly 70 percent of Americans have their financial futures tied up in the economic prospects of home ownership. Most Americans did not own stock in the tech implosion. It hits closer to home.

Q: Will there ever be an explanation for bubbles that we can all agree upon?

A: Not as long as the Internet empowers people who are not qualified to sound like experts.

Q: Will there ever be a time when the discussion about bubbles goes away? Is this just a passing fancy?

A: I suspect that as long as such large percentages of Americans own homes, there will be continued interest in the question. But, interest will rise and fall with overall economic prospects. Each of us is most concerned with what most concerns us.

Q: What has motivated you to participate in the bubble discussion and what have you learned? What is your background in real estate/economics?

A: I have learned that I value my opinion more than almost everybody else. I was driven into the discussion by my consulting clients’ concerns about what they perceived as being significant risk in the market. I am amazed at the amount of traffic and the numbers of posts on the various blogs, and find it impossible to absorb most of the thought and dialogue. I am selective about the few blogs I view on this topic. I have been a real estate analyst for 15 years. I am not an economist, but a professional communicator whose medium is numbers. That’s what makes me successful, and my opinion valid. But no blog posters seem to care.


What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

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