The Donald Trump Narrative and Urban Investors
Offsetting the modesty narrative was the Donald Trump narrative, which led to
his election as president of the United States in 2016. The Trump narrative
proved that many people are not at all “spooked” by those who “live large.” On
the contrary, as Trump openly states in his various coauthored books, it pays to
let people know that one is rich. Here the housing boom narrative is co-epidemic
with the conspicuous consumption narrative discussed in chapter 11. Vast
numbers of people have taken interest in the Trump narrative, which encourages
the idea that the display of wealth is an amazing, affirmative career strategy—
and the polar opposite of Occupy Wall Street idealism. The Trump narrative
epidemic contributed to the upward turn in home prices in the United States
starting after 2012.
FIGURE 15.1. “Housing Bubble” Google Search Queries, 2004–19
Internet searches shot up just before the world financial crisis of 2007–9; news media response was partly
delayed. Source: Google Trends.
In 2005, during the housing boom that preceded the 2007–9 financial crisis,
Web searches for housing bubble increased dramatically. The curve, shown in
Figure 15.1, resembles the Ebola epidemic curve (see Figure 3.1). Something
very contagious was clearly happening then. Some tried to capitalize on the
boom, not just by flipping homes but also by promoting the boom. Enthusiasm
for real estate investments infected a significant portion of the population. In
2005, Trump founded a business school, Trump University, saying, “I can turn

anyone into a successful real estate investor, including you.” Trump’s timing was
bad—the Economist ran a cover story on June 18, 2005, about the prospect of a
bursting housing bubble.21 Trump University went out of business right after the
world financial crisis, in 2010, amidst cries of fraud and deceit.

The Housing Market Today
Since 2003, I have collaborated with my late colleague Karl Case and now with
Anne Kinsella Thompson to conduct an annual survey of recent homebuyers in
four US cities. The survey is conducted under the auspices of the Yale School of
Management. One of our questions is “In deciding to buy your property, did you
think of the purchase as an investment? 1. Not at all; 2. In part; 3. It was a major
consideration.” The percentage who answered, “It was a major consideration”
peaked at 49% in 2004. The percentage choosing that answer fell to 32% in
2010, just after the world financial crisis, and by 2016 it had risen to 42%.
The survey also asks about the general level of conversation about the
housing market. Specifically, we ask, “In conversations with friends and
associates over the last few months, conditions in the housing market were
discussed (circle the one which best applies): 1. Frequently; 2. Sometimes; 3.
Seldom; 4. Never.” The percentage who answered, “Frequently” reached a high
of 43% in 2005, the end of the 1997–2005 boom. By 2012, the percentage
choosing “Frequently” reached a bottom of 28%, significantly below the number
during the boom periods. The likely interpretation is that the contagion rate for
housing market narratives had decreased, and that indeed the decline in home
prices could be viewed as the end of an epidemic.
What were the narratives in spring 2005? ProQuest finds 246 stories with the
phrase housing bubble from March to May 2005, before the cover stories in the
Economist and other places. One of these stories included a statement from Alan
Greenspan, who said that he saw “a little froth” and an “unsustainable
underlying pattern” in the housing market. This statement was then compared
with his “irrational exuberance” speech about the stock market in December
1996. Between 2005 and 2007, there were 169 news stories with both Greenspan
and froth in them. It was a colorful, quotable story featuring an economic
celebrity. It contributed to a colorful, and quotable, constellation of narratives,
among them narratives with the power to change economic behavior and to bring
on a financial crisis.
We turn in the next chapter from real estate to the stock market, to chart
another powerful narrative, putting the stock market at the center of the
economy. We shall see some similarities between the narratives, both contagious
in the context of perceived grand opportunities for investors, both intertwined

with stories of investor greed and foolishness.

Chapter 16
Stock Market Bubbles
Narratives about stock market bubbles are stories about excitement and risk
taking, and about relatively wealthy people who buy and sell securities. Like the
real estate narratives discussed in chapter 15, narratives about stock market
bubbles are driven by social comparison. Because they are fueled by psychology,
and because stock prices are related to general confidence, these narratives also
relate to the confidence and panic narratives presented in chapter 10.1 But the
stock market is different from the economy as a whole. Therefore, the narratives
that create and sustain stock market bubbles constitute another distinct
constellation of narratives, with a different path and different sources of
contagion.