Bursting Bubbles

I read an interesting column over the weekend on Slate comparing the current housing market to technology stocks in 2000 and 2001. The premise of the column, as you might have guessed, is this: The real estate industry is poised for the same type of brutal crash that decimated tech stocks and companies beginning in March 2000. Here's some of the argument:

...eerily similar charts of the NASDAQ composite index in the tech-bubble years and the index of housing-related stocks in the real-estate-bubble years. Both show rapid rises, a swift correction, and a subsequent rally when analysts and insiders proclaimed (prematurely) that the worst was over.

And:

It sounds like a replay of the 2000-01 period, in which software, technology, and dot-com companies, riding a wave of growth, thought the slowdown was a small blip.

There's no doubt we're in the middle of a housing market slowdown, and while it's almost certain we haven't hit bottom, I'm not so sure I buy the premise that it's still a long way from the bottom, as author Daniel Gross argues. Part of my reasoning is plain wishful thinking (which, of course, worked really well with tech stocks in 2000). But I also believe that housing prices won't plummet as fast or as far as tech stocks did seven years ago because most real estate retains some intrinsic value. You couldn't say the same for dozens and dozens of tech stocks that were built upon companies with poor business models, little revenue and crushing overhead, ingredients for an exceedingly shaky foundation.