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.”) This article focuses on a real estate agent who said in his blog that the “bubble is a myth.”

Jonathan Dalton, a real estate agent for Century 21 Arizona Foothills in the Phoenix area, opened a virtual floodgate to an unending real estate bubble debate when he wrote a post at his real estate blog on Nov. 10 titled, “Popping the Bubble.”

Though definitions can differ, a housing bubble is generally considered to be a state in which real estate prices are unsustainably high and out of step with economic underlying fundamentals such as income.

The debate over bubbles, which generally focuses on the timeline for such phenomena and the extent of the damage caused by such bubbles, has been inflating for several years now — and intensified as residential real estate markets set several consecutive records for annual sales and price gains.

A long list of blogs (see Inman Wiki: Housing Bubble Blogs) focus on housing-bubble discussion, news and analysis — some sites attract thousands of visitors and hundreds of comments each day.

Dalton took a giant step into the bubble debate and the online bubble community when he wrote in that notorious Nov. 10 blog post, “The bubble is a myth.”

Later, in a commentary he published at the ActiveRain.com real estate community site, Dalton said that the bubble post was “viral marketing at its best and worst. Should you venture into Bubble-land, be aware at the start that it’s not for the faint of heart.”

Traffic to his blog spiked after the bubble post was mentioned at the DCHousingBlues.com blog and the HousingDoom.com blog. Writing a “so-called controversial blog post, in this case on the nature of the BubbleHeads and the non-existence of the proverbial real estate bubble,” did bring more visitors to his site, though he said it was also like a “lesson in being careful what you wish for.”

Dalton’s blog post stated that bubble myths “are fueled by individuals’ private agendas” and he stated that the bubble myth is “fueled by people either with only the slightest understanding of the underpinnings of the real estate market, those who for whatever reason wanted to buy before the runup and didn’t, and kept alive by a national media reporting facts and figures without the slightest desire (or ability) to provide perspective to the statistics.”

While some of the “bubble folks” already own real estate, Dalton said “they argue that those who don’t, those who want to purchase their first home, should not.”

There were dozens of comments to the blog posting, some in agreement and some disputing Dalton’s argument. “The fact that as a real estate professional you are undeniably promoting an agenda with direct and irrefutable personal gain component should at the very least immunize anyone else in the debate,” one visitor wrote.

Another wrote, “The market is collapsing underneath you. The problem is not bloggers, but a very predictable reversion to mean. Yes, this was a bubble. Yes, it is correcting. Anyone who knows market history and economics saw this coming years ago. Shame on you for blaming the messengers.”

The following is a question-and-answer interview with Jonathan Dalton:

Name: Jonathan Dalton
Work: Real estate agent, Century 21 Arizona Foothills in the Phoenix area
Blog: http://myblog.daltonsazhomes.com

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

A: I’m a bubble debunker, in as much as I believe the term bubble is misused to imply a collapse akin to tech stocks circa 2001. Real estate prices go through cycles, rising and then reverting to the mean. What makes this so unusual is the precipitous rise. But I believe the notion that prices will fall to pre-2004 prices in many markets is pure folly.

Q: How do you define a housing bubble?

A: You would need to ask a bubble believer. But I believe the implication is the market will one day “pop” and collapse, driving prices to pre-2004 levels.

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: I don’t believe there’s a blanket answer for the national housing market.

Not all markets increased and some increased at far lesser rates than others. To say there’s a national housing bubble is overly simplistic.

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

A: I focus primarily on the Phoenix market and can’t speak with authority on markets across the nation. In Phoenix, prices have declined significantly in some areas and only slightly in others.

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

A: Most of the markets that rose precipitously in 2004-05 featured investment purchased with positive cash flow. Speculators and flippers helped fuel demand and create a sense of urgency as more traditional home buyers were battling to have their offers considered.

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

A: Again, I believe it depends on your definition of bubble. Most members of the Real Estate Bubble Complex (REBC) believe that if you don’t agree the market is ready to collapse that you’re still predicting prices will rise without end. It’s an inane argument. Prices have declined in some areas, but I don’t believe they will fall to pre-2004 prices.

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

A: The rise of the blog has fueled a great deal of the discussion. Come up with a cutesy title for a blog, make some outrageous statements and enjoy your 15 minutes of fame while it exists.

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

A: Members of the REBC seek capitulation, not agreement. All Realtors are evil to this crowd and their followers. Logical dissent isn’t wanted.

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

A: If/when the market begins to recover, when prices stabilize and when inventory starts to fall, logic would dictate some of the bubble talk would disappear. In reality, what you’ll see is a renewed round of talk about the “new, impending bubble.” When your theme is doom, it’s hard to take any other stance even if statistics eventually point to a different scenario.

Q: What has motivated you to participate in the bubble discussion and what have you learned? What has happened with traffic volume at your blog site over time? What is your background in real estate/economics?

A: What has motivated me is the “no surrender” stance of the REBC, the outright lies about the real estate industry, the inability of many to understand the difference between a real estate agent and a lender and the sheer chutzpah of many members of the REBC. At least those of us in the industry have some sort of accountability. Where will all of these REBC leaders be when the market begins to recover and those who followed their advice and avoided buying discover their window has passed?

Members of the REBC dismiss such statements as the typical argument from a Realtor, but their dismissals don’t answer the basic question — where will they be if they are proven wrong? If they’re right, fine. If they’re wrong, they willingly misguided hundreds or thousands of people who trust the advice of one-name hosts and anonymous commenters.

Traffic on my blog spiked when I dared question the REBC but otherwise has remained steady. I don’t deal in hyperbole or sensationalism, unlike the REBC, so my readership is not as wide. Sensationalism sells. But it doesn’t always add to the conversation.


Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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