Sorry to Burst Your Bubble

When is a bubble a bubble?

If you're to read the front page of almost any major newspaper -- including at least two this very day -- the bubble is now, it's real estate (search) and it's dangerous.

Not a day goes by in my business when someone doesn't talk to me about the real estate business. It’s too frothy and too much. The media is obsessed with this story. I think I know why.

The media missed the dot-com bubble (search). They bemoaned it after the fact, but said barely a thing during the fact. So now it's bending over backwards to warn of the day when real estate prices move backwards.

I can understand collective industry guilt. I cannot understand collectively scaring people.

I have no doubt that in some hot markets, prices are out of whack. Trust me, they'll get whacked.

But there's a very big difference to what's happening in Jupiter, Florida — where prices have soared 50 percent in the last year — and Buffalo, New York — where they've climbed about a tenth of that in the same year.

The nation isn't in a bubble. Those who scare the hell out of us are.

Anything can be taken to extremes and flipping properties like they're cards in a hot poker trade is extreme. But these are the exceptions.

Flippers eventually flop. But a wholesale crash means a wholesale retreat from fundamentals. Fundamentals like supply and demand — there's still far more demand than supply and still far more willing customers than greedy speculators.

The bullish argument is: They're not making more land. But I know full well that doesn't mean they're not making more fools.

Some like to play real estate like an Internet stock. Others buy because they're taking stock. There is a difference.

The media feels guilty it missed a bubble when there was one. Now, I fear it's creating another, when there isn't one.

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