Housing always swings much more wildly up and down than does the general economy. A survey that came out a couple of weeks ago drove home for me the reason why. The recent survey, from Hart/MacArthur, said that 7 in 10 people believe we are still in the middle of the [housing/economy] crisis, or that the worst is yet to come. That seems unduly pessimistic, given that job growth is improving, and that can only help incomes and housing demand.
That said, undue optimism reigned before. I had to go back to some old notes to make sure I remembered correctly just how wild people’s expectations were during the boom. According to Fortune Magazine in 2005, a survey done by Shiller and Case revealed that 28% of homeowners surveyed in Boston, LA, and San Francisco believed that home values in those areas would continue rising at 20% per year for the next ten years.