Housing bust may ride on taste.

• Author: Rundles, Jeff
• Position: Rundles Wrap-up

IN YET ANOTHER CASE OF HUMAN NATURE GONE RATHER SILLY, I have been hearing a lot lately from people worried that the price of their house is going to drop precipitously.

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Calm down.

I have lived in Colorado for 33 years, and owned property here for nearly 30, and I have only seen two kinds of residential real estate drop in value: cheap condos that were built as apartments and should have stayed that way; and very expensive--very expensive--resort housing where the "greater fool" theory is limited by the number of people who can afford to be so foolish.

It amazes me that when housing prices soar--and that has happened a lot here in the Denver area and Colorado generally--people take that almost as a birthright. But when the prices flatten out, people think the sky is falling on them alone.

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As I have pointed out many times before, a "boom" in economic terms means "a period of unsustainable growth." The key word is "unsustainable." In my experience, the booms in housing prices have been longer than the flats or busts, but by nature the booms and busts happen in equal numbers. One leads to the other.

So don't panic.

Unlike the stock market, real estate has some real underlying value. Yes, it is manipulated all the time by speculators, and yes, it is subject to the herd mentality of what constitutes hip, chic and upscale. Still, I have never seen value shrink away.

I have seen it stop growing for a while, but in Denver at least, I have never seen the graph line in real estate point downward.

Having said all that, however, if house prices do fall, I think it won't have anything to do with overall market conditions. It will have more to do with taste, or the lack thereof.

In this period of adjustment--an economic correction, if you will--we should probably take less time to reflect on the price of our houses, and much more time to ponder just what we have wrought with the houses we have bought. They say that a man's house is his castle, but only in the last decade or so has this been made manifest in city after city across America.

"Nice house" used to mean many things, but now it means "new" and "big," not necessarily in that order. If the house isn't new, people buy them, gut them, and make them new, with some outward appearance that there might still be some "old" in there.

It's a ruse. The object now is to have vast spaces, and to fill it up with as much high-tech gadgetry as possible. I've been in...