Real Estate: The Truth at the Heart of the Crisis

A favorite quote of mine about real estate popped up in a Tom Vanderbilt essay revisiting Thorsten Veblen's classic Theory of the Leisure Class. The quote comes Richard’s Ford’s Independence Day:

…the one gnostic truth of real estate: that people never fund or buy the house they say they want. A market economy, so I’ve learned, is not even remotely premised on anybody getting what he wants. The premise [is] that you're presented with what you’ve might’ve thought you didn’t want, but what’s available, whereupon you give in and start finding ways to feel about it and yourself.

As Vanderbilt writes, for the first time in real estate history that truth broke down in the last decade, with requisite calamities ensuring.

Comments

[Roger Knights:]

Thanks.

(PS: "feel about it" should (?) be "feel good about it")

Jul 06 12:13 PM

[Lightway:]

Funny money certainly changed the game, and the sky was the limit. There was a saying during the housing bubble, "buy as much house as you can afford," and oh boy was there alot of house ANYBODY could afford. The original idea of buying a house which purchase price equaled 3 x gross income, got tossed out the windows as the fundamentals went out of the picture. Believe it or not, fundamentals are still out of line in many of the more acute bubble areas, such as California.

Jul 06 12:45 PM

[davidma11:]

FRAUD. that is what is different. The average 'Joe" didn't have a problem committing fraud and banks didn't care because the sold their paper to foreigners. What is different is the average person feels no remorse for defaulting on their borrowering..

I keep reading over and over on how the banks are mean because they won't write off 300K off of someones mortgage. Personal responsibility is gone and now we are spreading the pain to everyone else. Now I get to pay for someone elses mortgage and mine too.

Jul 07 09:36 AM

[Gregman2:]

This is another reason to be using www.homevaluepredictor...;-)

Jul 07 12:31 PM

[Joe Adamaitis:]

Fraud?????
It began at the very top of this chain. Analysts who projected unimaginable profits at all costs and who gave the thumbs up on garbage programs. Their bosses who went along and created subsidiaries to peddle the garbage and then their co-horts on Wall St. who continued the push to billions.

Le tus not forget the distribution channels set up by these same buffoons via wholesale and correspondent lending. Remember one thing, as a banker or broker, I do what I'm instructed to do in order to sell the paper.

If you tell me collect W-2's and paystubs that's what I collect. If you say I don't need documents just send me the app, that's what I do. I earn a living doing as I'm told by the people who are supposed to know what's going on. They were supposed to run the models and they did not!

All I'm saying is if you continue to blame the homeowners whether they were good bad or indifferent, greedy or naive, then we will never get out of this. As the news broke today in the Boston Globe, these same lenders are not helping people. They took 75 billion to go towards helping alleviate the foreclosure issue and they instead have hoarded the cash. The same guys who started this fiasco!

So the real question for anyone who wants to continue whinning about spending our tax dollars on irresponsible borrowers, is this:

You may not want your tax dollars going to to people who are now stuck, but who would you rather this money go to?

Those who will survive and help turn this economy around or those who already made billions the first time around and won't drop a dime to help you or this economy?


On Jul 07 09:36 AM davidma11 wrote:

> FRAUD. that is what is different. The average 'Joe" didn't have a
> problem committing fraud and banks didn't care because the sold their
> paper to foreigners. What is different is the average person feels
> no remorse for defaulting on their borrowering..
>
> I keep reading over and over on how the banks are mean because they
> won't write off 300K off of someones mortgage. Personal responsibility
> is gone and now we are spreading the pain to everyone else. Now I
> get to pay for someone elses mortgage and mine too.

Jul 07 03:10 PM