The Boom and the Bust

“It is a town,” said Mrs. Foltz. “It was meant to be, anyway. The developers never got any further than marking out lots and streets. What you see here is the result of speculation in the real estate market. It is a gamble gone badly, as it has for so many who bought land on credit. And for the capitalists who advanced it to them.”

The Deadly Stingaree, Chapter 17, The Long Road

In my most recent novel, The Deadly Stingaree, the protagonist Johnny Cong visits a town named Sombra de Oro. It isn’t much of a town, a one-room train station surrounded by empty, unimproved lots inhabited by rabbits, coyotes and crows. An English translation of Sombra de Oro would be something like “shadow of gold” or “golden shadow”. There were a lot of golden shadow towns in San Diego County in the the late 1800s, dusty remnants of the largest boom and bust real estate cycle in Southern California history.

How big of a boom and bust was it? Consider this. San Diego’s population was 2,637 in 1880. At the peak of the boom in 1887, the population had grown to 40,000. Two years after the crash began in 1888 the population had dropped back down to 16,159.

What caused the boom and the bust? The railroads. In 1885 the transcontinental railroad reached San Diego. The first train leaving San Diego departed on November 15. The first train from the east arrived six days later, on November 21.

Everyone agreed the railroad would bring more visitors to our sunny climes and that Eastern visitors, after taking in our Pacific Ocean views and the beautiful weather that went with it, would fall all over themselves to buy a house here. Ads were placed in Eastern newspapers. Get-rich-quick speculators arrived soon afterward. The race was on. Prices went through the roof.

At the height of the frenzy some properties were sold two or three times in the same day. So-called “developers” would buy large tracts of land and quickly subdivide them. Loan sharks and newly-minted banks were lending money at extravagant rates. Buyers who got in early and sold quickly made money. But those who got in late or held on to their properties too long lost their shirts.

What happened? Like all real estate bubbles, the rapid increase in prices was unsustainable. The market began to slow. Then came the real blow. The Santa Fe Railway moved its switch yards and repair facilities from National City (in south San Diego county) to San Bernardino. It also re-routed its railroad line to the coast. San Diego became the terminus of a spur line from Los Angeles instead of getting direct traffic from the east.

So the San Diego where Johnny Cong lives in 1891 is a city recovering from financial ruin. President Benjamin Harrison’s impending visit is a source of civic pride, a sign of hope that the city still matters.

There’d be more real estate bubbles and busts to come in San Diego history (I’ve lived through two of them) but none can compare to the original.

I own eight plots of land here in town. Not a single one of ‘em is worth what I paid for them.

Wyatt Earp, the Deadly stingaree, Chapter 4