"The money feels good
And your life you like it well
But surely your time will come
As in heaven, as in hell."
I just sat down to write this and since I just saw my fellow duplex dwellers leave our small building, I put on the Clash nice and loud. It sure seems like the perfect music for the topic, which today is real estate finance.
In all of the other parallel universes, this topic is as dull as it sounds, but unfortunately in our very bizarre universe, this topic is so important that some normal people are actually starting to notice it. According to the mainstream media (aka MSM in blog speak), here in California, 57,158 families noticed because their dwelling was the object of a foreclosure filing. Folks, that's almost half a percent of all residences in the state in one month!
I really hate being interested in the real estate market, I really do. Although there should be nothing wrong with it, real estate is where con men, realtors, and other punks get their rich quick.
In the last week, I've been reading a geometrically increasing amount about the housing situation. It's weird to see the MSM suddenly realize what for years should have been patently obvious to anyone smart enough to fog a mirror: the housing market is in serious deep shit. The shit is so serious and so deep that if the damage was merely contained to recent home buyers becoming indentured servants to Saudi princes, we'd be getting off lucky.
When I first arrived in SD in around 2000, I wasn't really concerned about real estate. I couldn't have afforded it and I figured that when the time came and I could, that I would be at least as well off as normal people and it wouldn't be a problem. Turns out that was wrong in two ways. When I finally had a credible amount of capital, I learned that, one, I still couldn't properly afford real estate and, two, which is much more bizarre, that it didn't matter. Nobody could afford California real estate so banks were basically buying houses for people to take care of. This investment was justified with the unassailable logic that house prices never go down. I suppose mortgage lenders are not very bright, are mostly criminals, or both. This is one of those times where I was happy to have the ability to empirically size up the situation and determine that just because everybody else seemed to be doing something stupid, was actually evidence that everybody else was indeed stupid.
I was sitting on plenty of cash by the end of 2005. I'd roughly noticed some house prices without too much research. Things seemed crazy, but I wasn't really paying attention. By the beginning of 2006, I felt that things must have cooled down a bit and I'd go out and see what was what. I went and looked at a lot of houses. For such an expensive market, San Diego has some spectacularly awful real estate. Always the feeling I got was, first, I could only barely stand to live here, and second, what kinds of millionaires wanted to live here? I was not oblivious to the median income here which led me to believe that the only people who could afford the houses I was looking at were bank presidents, movie stars, real estate con men, etc.
Since I'm a "do the math" kind of guy, I calculated exactly how the typical home would affect my day to day finances. It looked like it was vaguely possible, perhaps, for me to pull it off, but there was one problem. What if real estate didn't "always go up"? Of course the real estate agents must have a special laugh they practice designed to convey, "Good one! Ha ha! That's hilarious because real estate prices never go down. Ha ha!"
This actual quote is taken from "www.realtor.org".
"Know What to Say
Get scripts on how to respond to prospective clients' most common objections, from those pesky questions over a sour housing market to FSBOs who think they don't need you."
You know what other profession uses and practices scripts to allay their victims' misgivings? Con artists. I guess that probably pushes nervous thoughts from the minds of most buyers, but I am highly suspicious of these clowns and when they insinuate something like this, I start imagining prices changing levels as they've done in the last 10 years, but going the other way. I started realizing that even small fluctuations of a few percent could wind up being financially ruinous at these overblown prices. These real estate agents are sending families to their dooms.