Paul Krugman, the Nobel Prize–winning economist, wrote of the bubble and its inevitable end in August 2005. “This was baked into the system,” Krugman later told me. “The housing crash was not a black swan. The housing crash was the elephant in the room.”
Ordinary Americans were also concerned. Google searches on the term “housing bubble” increased roughly tenfold from January 2004 through summer 2005. Interest in the term was heaviest in those states, like California, that had seen the largest run-up in housing prices—and which were about to experience the largest decline. In fact, discussion of the bubble was remarkably widespread. Instances of the two-word phrase “housing bubble” had appeared in just eight news accounts in 200120 but jumped to 3,447 references by 2005. The housing bubble was discussed about ten times per day in reputable newspapers and periodicals.