This is an article from the New York Times about the property bubble in Japan in the late 1980’s, written back in 2005 when the US real estate boom was probably at its peak:
JAPAN suffered one of the biggest property market collapses in modern history. At the market’s peak in 1991, all the land in Japan, a country the size of California, was worth about $18 trillion, or almost four times the value of all property in the United States at the time.
Then came the crashes in both stocks and property, after the Japanese central bank moved too aggressively to raise interest rates. Both markets spiraled downward as investors sold stocks to cover losses in the land market, and vice versa, plunging prices into a 14-year trough, from which they are only now starting to recover.
Now the land in Japan is worth less than half its 1991 peak, while property in the United States has more than tripled in value, to about $17 trillion.
This is the Nikkei stock market index for the Tokyo Stock Exchange. As you can clearly see, the peak of around 39,000 was attained in 1989. Almost 2 decades later, it stands at 9000, falling from a recent peak of 18000.
And most of you would be familiar with the Nasdaq index which peaked at around 4800 and is 1770 today.
The excellent authoritative economist on bubbles has been Robert Shiller. He predicted the technology bubble in his book “Irrational Exuberance” and later updated it to cover the housing crisis in the next edition.
I wonder which person is buying this book today (still selling at Amazon for $16). The sub-title reads “The Boom Will Not Bust and Why Property Values will Continue to Climb Through the End of the Decade – And How to Profit from Them” [emphasis mine]. Talk about wrong predictions!