Sunday, July 19, 2009

Take a Look in the Mirror

As I am just catching up on reading the news from the last few weeks (I was traveling abroad), I saw this quote over on the Ben Jones blog:
If society just followed the advice of its grandparents, there wouldn't be an ongoing crisis with foreclosures that helped trigger the nation’s economic woes, according to the author of a new book. Shari Olefson, a Tampa, Fla., attorney…says simply blaming Wall Street, government regulations or predatory lenders — all who share culpability — is just shifting responsibility away from those who bought the homes.
I don't know how many times I got creamed by readers when I expressed that very same opinion on this blog.

If you want to know who is most to blame for this housing (and the ensuing economic) mess, just look in the mirror. You know who you are. You ignored that little cautionary voice in the back of your head, didn't stop to think for yourself, you let your friends/relatives/neighbors do the thinking for you when you said to yourself "everyone else is doing it, so..." and agreed to pay that stupid/ridiculous price for your house. Blame the enablers all you want, but at the end of the day the final responsibility rests on the shoulders of those who decided to "pull the trigger".


Blogger Lisa said...

Welcome back!!!! You were missed!!!!

I think people are learning their lesson, at least those trying to sell right now. Case in point here in San Anselmo: very cute cottage close to town just went on the market for $795K. Last sold in 2004 for $815K. Remodeled to the hilt, of course. So that's a nice haircut in 5 they'll lose another 5-6% in realtor commission, plus all the money they shelled out on mortgage payments, property taxes, insurance, utilities, improvements, etc.

One step closer to "Real Estate, yuk!!" as the new mantra, even here in Marin.

Jul 20, 2009, 5:12:00 PM  
Blogger marinite2 said...

Check out this rhyme - pretty much sums it up:

Jul 23, 2009, 2:37:00 PM  
Blogger marine_explorer said...

"If you want to know who is most to blame for this housing (and the ensuing economic) mess, just look in the mirror."

In the macro view, it's just shocking how much money has been blown on simply stupid crap such as six-figure kitchen remodels, his-and-her Jaguars, 4000sqft+ homes for a couple--you name it stupidity, all in the name of "luxury". One might argue that's OK...if you can actually afford it, but the typical consumer has lived in a fantasy world—a personal "bailout" for the last few decades aided by banks. How ironic that corporations exercised a similar lack of control and foresight, but everyone is now irate at them. Huh.

The real tragedy may be those untold billions $ blown for residential RE and "lifestyle upgrades" is money unavailable now for business development and education. People's gluttony on credit ultimately impoverishes the next generation..well done.

Jul 24, 2009, 12:20:00 PM  
Blogger Matthew said...

Marinite.. I have to disagree with you to a large extent on this topic..

On the "blame" issue.. yes, in the end, we're all responsible for our decisions, especially where we put our money and what we buy... That said, I believe there were many assumptions made about the real estate market by buyers that were simply not true...

For example, people assumed that those 8 or 10 other bidders in the "multiple bid" scenario were legitimate buyers.. As we see now, that was pure BS brought on by rampant fraud in and by the RE industry at large..

For example, people assumed that the powers at be at the head of our government and institutions (eg. Greenspan) knew what they were talking about... that was also a poor assumption...

There were many other assumptions people made about buying a home during this period which were simply not true because of all the fraud, deception and greed infested in this industry..

I've seen many articles on where blame for this disaster should lie.. #1 remains the Fed followed very very closely by Congress.. then it's the Wall Street scum (to include the rating agencies) who goosed this thing for all it was worth and made a absolute fortune in the process followed very very closely by Freddie and Fannie scum and the mortgage industry they were in bed with…. then, very very close behind are all the lying and cheating RE brokers/NAR/CAR scum who are nothing more than opportunists and contribute little to society other than to inflate housing prices for their own profit.. then it's the individual buyer along with the mass media who profited from all this as much as anyone..

The whole housing market was a rigged game of fraud and deception.. those at the top of this game knew the buyers and buyer’s mindset better than the buyers knew themselves... They used fear and greed to goose the market like never before and mortgaged our future in the process as well as ruining many many families balance sheets, finances and futures in the process.... a whole lot of scum..

Those who did not partake in this fraud induced and rigged market had to endure all the BS from this very vocal and public crowd of scum… they had to read about it every day in the Mass Media and listen to it at dinner parties etc etc.. They had to ensure pressure from family and friends, many of whom couldn’t spell amortization or balance sheet let alone understand what the hell these terms meant.. I'm glad I held out, but can't blame everyone who did not because the odds / media / social pressures were all stacked against them…

This bubble was America at it’s worst and still is…

Jul 25, 2009, 7:24:00 AM  
Blogger zzzz said...

Matthew - very well said.

I agree that living beyond your means is not smart. But this recession is very complex due to all the fraud and deceit that inspired it. I look in the mirror and in hindsight I see some bad decisions I have made. But overall I lived within my means, paid my 20% down and now due to a job loss am walking away from a condo I can no longer afford. I never cared if I made a lot of money on it, I just didn't ever expected this. People need to be careful of their harsh words because each story is different. It isn't black and white. We need to all be kinder to each other.

Jul 25, 2009, 10:33:00 AM  
Blogger Matthew said...

zzzz - agree, (I think).. make no mistake about it, your job loss (and I'm sorry for that) and about 90% of the other job losses during this recession are because of the housing market ... there is no question about that to me….. this housing bubble warped many, many things in this country for short term profits... it warped education, it warped capital investment, it warped tax incentives and investment, it warped the media, it warped the average American’s thinking, it warped work ethic, it warped the value of a dollar saved and the value of a dollar earned.. I could keep going; you get the picture…

After the tech bubble burst, probably 40-50% of the jobs created (or more) were tied to housing and RE either directly or indirectly... As a country, we invested in housing, landscape, granite counters, SUVs, RE licenses and mortgages instead of education, sciences, healthcare and energy.. housing was much easier and faster to reach that golden ring..... well, it was easier for a while anyhow… now we've got a hang over..

As I noted, housing and RE were easy scores... uneducated and pretty (fake) people could make a lot of money off of trading and flipping houses, so why not.. Again, America at it's worst..

I knew we were in for a rude awakening when my daughter asked me to give up my otherwise good job that contributes to the greater good and get into Real Estate instead so I can "make better bank"... geeze.. (the joy of being a parent in Marin)..

Detroit and the auto industry are suffering due to housing.. they screwed up with their capital investments and long range plans because they didn't understand what was behind their SUV sales.. HELOCs of course, but that epiphany, after all, was high school level thinking, and too hard for them to contemplate, so they imploded on their own stupidity due to greed brought on, again, by housing..

It's allllllll due to housing and the scum associated with goosing it to hell..

Jul 25, 2009, 12:12:00 PM  
Blogger marine_explorer said...

"my daughter asked me to give up my otherwise good job that contributes to the greater good and get into Real Estate instead so I can "make better bank"... geeze.. (the joy of being a parent in Marin).."

Seriously, I find that a little shocking because 1. kids are getting programmed by society to think that's all that matters, and 2. realty is the kind of soul-starving, crappy sales job nobody should want, even for "bank". No offense to anyone, but I'm glad I don't have kids in Marin schools with that kind of execrable peer pressure. Such kids are in for a terrible shock when the credit crunch grinds their adult-spawned fantasies into dust.

Jul 27, 2009, 9:02:00 AM  
Blogger marinite2 said...


You are certainly entitled to disagree so no apology is required. Besides, this post was intented to generate discussion which it is doing.

But I am not convinced. Yes, there was a lot of desception and hucksterism out there and those parties should be severly punished and hunted down like the dogs they are. You named them well: realtors/agents, bankers, Congress, the Fed, Wall Streeters, etc. But at the end of the day, the buyer did not stop and ask themselves "does this even make sense?". "There are other bidders? Show me the bids." Why could you and I see it for what it was and not fall for it whereas clearly the majority of others could not? Did they just believe what they wanted to believe? Were they just tricked into it? Were they all just sorry victims? It doesn't matter as in the end it was ultimately their decision. Buyer beware! And I think the only way such people can ever learn (and avoid this fiasco in the future) is to get burned.

Maybe I give too much credit to the intelligence of people but I consider myself pretty average and if I can see it...

Take for example the California budget debacle and the history of Californian voting patterns. On the one hand Californian voters want more and more state services; on the other hand Californian voters don't want to pay for any of those services and further want to pay less taxes. Both understandable points of view but both cannot be sustained. If your average Joe were to stop and think about it he would see the problem that now we all have to live through.

Jul 27, 2009, 3:30:00 PM  
Blogger Lisa said...

Today's Marin IJ featured a front page article about Pacific Union getting gobbled up. And at the bottom of the article, which did acknowledge it's a "difficult" market in Marin right now, there was this little tidbit:

"Through the first six months of this year, there were 881 residential home sales in the county, according to MAR. At last year's midpoint, there were 965 home sales. By the halfway mark of 2004, 1,987 home sales had already taken place."

So, even with lower prices, sales are still down 9% versus last year. And compared to 2004, one of the big bubble years, sales are down 56%. Ouch.

Jul 27, 2009, 4:48:00 PM  
Blogger Matthew said...

I know a lot of educated people and families who bought shortly after the bubble burst... despite the costs and risk, home buying is probably more of an emotional decision versus a rationale decision.. that's why realtors do what they do... they scared the hell out of the average potential buyer, who were the ones who bought after the bubble burst.. they "got their foot in the door" and boy were they "lucky"... yea, right.. give me a break..

As I said before, so far, everyone I know who's bought after the bubble burst has regretted it.. Now, I'm sure there are buyers who don't (yet) regret their decision for buying recently in Marin or the Bay Area, but this thing is not over by a long shot...

Housing is still out of balance here in SF Bay vs wages compared to historic relationships… way out of balance in some locals like Marin.... that relationship cannot last without something to hold it together.. it was pervasive fraud and zero underwriting and incompetent banking that held it together before.... What will they come up with this time besides foreclosure moratoriums & $8K down payment bribes ? When will we run out of those gimmicks ?

Marin will see another 25% price reduction before this is all over with… the more I look at the houses around where I live, the more sure I am that there is no way they are worth ¾ of a million, I don’t’ care how well they are landscaped… give me a break… yea.. right… probably 90% of the occupants couldn’t afford to re-buy them under conventional lending standards, so prices will be coming down, make no mistake about it..

Jul 29, 2009, 6:26:00 AM  
Blogger Matthew said...

Just a quick post to report on a chance meeting last night with two Novato Realtors... this may not come as a shocker to people on here, but, to these two Realtors, the market is still very much "dead"..

We talked a little about prices and price direction, but I realized that neither of them had very much experience, at all, in seeing the down side to the bubble and hype they helped create... it was tough for them to connect the dots between the problems in their business now versus all the BS, fraud and hype their business help perpetrate on the rest of us the last 8 or so years... "You mean, everyone in Marin or Novato doesn't make $200K per year to afford these high priced homes?"... Uh, no.. not now and not ever ... that's why it's dead... prices still reflect much of the rampant fraud that got them there..

Bottom line, there is very little business other than distress and the distress business is very cuthroat .. price reductions and concessions (big time) are still the order of the day..

Prices are still way out of whack as compared to historic wages and will come down, but it will take some time.. Anyone who buys now will regret it in 1-2 years when you can get the same house for 25% less or so..

Aug 1, 2009, 4:19:00 PM  
Blogger mountainwatcher said...

This comment has been removed by the author.

Aug 3, 2009, 12:05:00 AM  
Blogger mountainwatcher said...

Has any one watched the local coverage of the RE market on KPIX.
Please go to their video library and check out some of the recent RE reporting.
I couldn't find a way to link to the specific video.
The date is Aug.1 2009 6:57PM

It looks like a reprise of the pre bubble panic "journalism".
I'm angered that they would do this after the huge mess that all of this greed created.
I'm stunned that this could come back so soon.
Are we just a bunch of idiots?

The address for the video library is..
Then you have to seek out the real estate clips.
Again, look for Aug.1 2009 6:57PM.
There are a couple of others too.

I'm angry that they are sending the "buy it now" message again after all of this misery.
The local media was a huge component in the fueling of the bubble.
Now they seem to be returning to this crap.
Why is there no alternative viewpoint?

Am I overreacting?

Aug 3, 2009, 2:16:00 AM  
Blogger Matthew said...

My thinking on that, Mountainwatcher, is that if they write about it enough, then the last few years will not really seemed to have happened or if they write about it enough the last few years will be looked on as the exception vice the norm, with the norm being all the bubble propaganda BS...

In the end, we're pretty simple creatures with lots and lots of faults.. our biggest fault lately is the sense of value and work and money.. our work ethic.. it's trashed.. so these RE progaganda journalists will always have a ready and willing audience to write to...

It's total BS...

Cash for clunkers.. bailouts upon bailouts... remove the government stimulus and what do you have ?? you have high housing prices that will continue to choke off other industries (eg. auto/mfg) unless you lower / kill mortgage underwiting standards and restart all that subprime / Alt-A stuff all over again... as a nation, trust me, we're dying to do just that..

Government's #1 job is not to govern, it's to preserve itself... I'm absoultely, positively clear on that.. that includes the Obama Admin too (who I voted for).. That Job #1 MOU goes for every state and federal agency... every senate body, every agency, every house ... every damn one... Job #1 is keeping your job and selling your story or service...

Obama is alreadry running his mouth too much on saving the economy.... This is true whether the Dems or Repubs are in office, so, with that, anything is possible I guess... I would not be surprised, at all, not a bit, to see this thing get going all over again within 2 years.... it's like heroin to politicians and industry pundits.. it's an easy fix and one you can declare political victory on with the ignorant and lazy masses who wouldn't know any better, anyhow.. Government, Wall Street, the Fed and industry all know they have many, many potential junkees (FB wanna bees) just waiting for that next bubble fix and housing is the best game in town... for sure..

A joke..

Aug 4, 2009, 5:33:00 AM  
Blogger Matthew said...

The dilema I'm facing right now is whether to play the sorted game under the sorted rules that are being put in place or not... not about buying a house right now (not here, not now), but doing things like going "all in" with this market... see it for what it is and who cares about reality or not... it's just a game anyhow..

After all, we've got Goldman Sachs reporting record earnings, the autho industry being held together by the US taxpayer, the US deficit to surpass $2T/year this year (easily) and >10% unemployment... That's not to mention armies, marines and sailors spread around the world in countries that despise us or on oceans that are heating up and dying ...

Yes, it sounds like it's time to go all in..

Aug 4, 2009, 5:45:00 AM  
Blogger marinite2 said...

As hard as it might be to believe, it appears the Fed and other central banks around the world are on their way to creating an even more massive bubble to replace the one that just burst.

If this is right, and I am not sure that it is, it implies that I get the dubious honor of starting a Marin Real Estate Bubble Blog 2 site in the near future. Or maybe just continue on with this one. Or better yet, let someone else carry the torch as I have long since lost motivation.

Aug 5, 2009, 10:54:00 AM  
Blogger Unknown said...


I don't deny that many people at banks, politicians, the RE industrial complex etc cheated, lied, manipulated and defrauded the house-buying public. The list of the guilty is long. But that's exactly the point: your average Joe participated, and very willingly at that. People are not sheep. Like Marinite points out, the bubble was clearly visible to anyone who cared to look. The trouble was, a lot of people preferred the fantasy. As is typical in bubbles.

My wife and I bought a house in San Rafael in 1996 and sold in 2005 (it took a move to her home town to get her to sell). In the last few years, I had many conversations with people who did not want to hear any non-bubbly view of RE in Marin. I would have had a better reception if I had called GW Bush a liberal dove. The reaction was almost always emotional, often angry. Needless to say the "conversations" didn't last long. Sure, one or two people thought no-doc loans were a bit much, but more often people said they knew someone who got one and deserved the loan and the house. I knew for sure it was a bubble when a friend of mine, a red-diaper baby boomer who calls himself a communist, always lived from paycheck to paycheck and never pays attention to the mainstream media, said he was hoping to find a way to buy a home. That was in 2003 or so.

I don't see how it is possible to absolve buyers of responsibility. They're all adults. The vast majority were enthusiastic participants in the bubble, inflating as hard as they could, blinded by greed.

Aug 5, 2009, 9:35:00 PM  
Blogger Lisa said...

"People are not sheep. Like Marinite points out, the bubble was clearly visible to anyone who cared to look. The trouble was, a lot of people preferred the fantasy."

Fred, I think you hit the nail on the head. The fantasy was so much better than reality. Why save when your house is going up 10% or 15% every year, and that equates to a far bigger number than you could save anyway? Not having to bother with savings means you can get that new car every 3 years, eat out, have your house cleaned and your gardening done, take nice vacations, buy a bunch of stuff you don't need, and never have to worry about it.

I owned here in Marin from 1996 to 2004, and yes my house went up way more than I saved every year, but I made sure I saved, used cash for my home improvements, etc.

People get defensive when bubble talk comes up, I think because their balance sheets are crap without RE riches and they know it. Too much consumption, not enough real savings, and now the house isn't going to lay that golden egg after all.

Aug 6, 2009, 8:39:00 AM  
Blogger Matthew said...

Hey, I'm all for personal responsibility.. I don't think we have enough of that in this country any more (for sure).. That said, we're also all social beings.. we all want to fit in.. it's natural.. it's survival... we're an easy mark...

We're generally misfits when it comes to being swayed by the media.. don't believe that? well, just look at Presidential politics in this country for the last 50 years.. the American public's opinion and view on things can be moved with a slight breeze... same with housing.. we're generally dumb and prone to group think.. we can avoid or deflect personal responsibility that way....

All those you just listed, and who I hold primarily responsible for this massive disaster, did not conspire together necessarily to create the housing bubble.... I don't think anyhow.. However, once it got going, they all recognized it and they profited massively from it.. Others, like Congress and the Fed, both profited from it (you bet they did) while being paid to prevent things like the housing bubble from happening... they failed.. miserably..

Aug 6, 2009, 9:41:00 PM  
Blogger Matthew said...

Lisa made a good point on savings... savings takes discipline.. just look at the waistline of the average American and tell me we're a disciplined country.. not.. not any more.. sorry, that's a fact..

Housing fed that laziness.. fake savings.. inflated sense of self-worth... just what this country DID NOT need..

Aug 6, 2009, 9:46:00 PM  
Blogger Matthew said...

thought I'd post just for the hell of it to see if anyone still is reading this blog...

For what it's worth, housing is still in a bubble here in Marin and will be coming down.. stamp your feet all you want you realtor and mortgage whores and fraudsters, that's whats going to happen... personal and houselhold balance sheets and income statements and statements of cash flow are still way out of balance because of the massive housing bubble... that's gonna correct itself, even here.. bank on that..

Left alone, housing would be 25% less already, I bet.. eventually, (eventually) even we, the dipshit public, will get fed up with runnaway defict spending and bailouts and will be screaming at Congress to cut the crap out and to listen to Ron Paul and save the damn dollar.. eventually... when that happens, housing will deflate once again with rising rates and will continue to deflate until it reaches historic balance for wages w/the normal premium for location..

What we've got now are prices greatly (hugely) influenced by all the fraud and speculation that was in the market... people thought that was actually real fundamental stuff because of the sales job by the fraudsters and mass media... ooops, sorry, all BS.. all of it..

So, bottom line, why buy now ? You think that 3 BR home priced at $650K is going higher ? yea, righto.. What's going to be driving those housing prices higher ? Huge wage growth ? yea, righto again.. Nah, the price risk here in Marin is almost all to the downside here still....

I've already heard about the little price or sales bump we got over the last few months here and there.. that too will pass.. it was due in large part to all the shenanigans that lured buyers into the market (like the clunkers progam).. those shenangian programs will be going away soon, and then that homeowner will be looking at that $4,500 mortgage payment and wondering what the hell he/she bought the house for ... I guarantee it, esp as they look at transportation costs, education costs, food costs etc etc.. the only reason to buy an over priced home is if you think it's going to become even more over priced after you live in it.. so sorry, that game is over..

We're heading for 1998/99 (or so) prices again... easily.. that's a good thing for this country too by the way.. good for the auto market, good for education, good for my kids and your kids... hell, it's even good for the fricken RE market for god's sake (course, they can't connect the dots).. so, suck on that RE machine... you collectively all stink and we'd all be better off without any of you...

Aug 20, 2009, 8:35:00 PM  
Blogger Marinite said...

thought I'd post just for the hell of it to see if anyone still is reading this blog...

If anyone wants to take over this blog, by all means say so.

Aug 20, 2009, 9:08:00 PM  
Blogger mountainwatcher said...

I still come here to check for new posts.

Marinite, Matthew and Lisa have been great sources of information for me.
I'm thankful for all of the input.
I don't have to feel bad about not being an "owner".

My sincere thanks.

Aug 21, 2009, 12:20:00 AM  

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