The housing story is big one, in fact, I believe that it's monumental. But as important as this story is, it is also a big one simply by the breadth and variety of smaller stories that have collectively made the bubble what it has become.
That's because creating a bubble of this magnitude wasn't easy. It took a number of smaller stories, like the massive rate cutting of the Fed, the all too easy credit, the rampant speculation, and the fraud, to create the mania that practically doubled home prices in 5 short years.
But as this mania has begun to unravel, it has spun off other and more numerous smaller stories.
Like all stories, they have a human side. And like all stories they are best told by the people that are living them.
And if you don't believe me when I write that the bubble has popped, just listen to words of the some of the folks at ground zero.
Needless to say, they put it better than I can.
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· Commenting on the New York scene veteran real estate broker Deanne Esses has this to say: "Business here is just not quiet; it has dropped dead over the past few weeks,' At the same time, there's a flood of inventory on the market. We run open houses, we run advertisements, but nothing works. There are no buyers, and without buyers, there are no sales. Prices are down at least 10% from a year ago on practically everything."
· In response to recently released data Roger Kubarych, an HBV economist had this to say: "Inventories are up 19% year-on-year and the inventory overhang will put additional pressure on builders to cut prices. The housing downturn is not about to end quickly and, by the time it does, public awareness of the associated loss of wealth will be far higher than now."
· Ivor Hill, head of Pueblo-based IJ Hill Appraisal Services said this about dishonest appraisals: "A lot of fraud is committed by appraisers who want repeat business from lenders. If the lenders don't get the amount they want for the loan, they will ‘blackball' the appraiser and hire someone who will provide that amount. They commit fraud to stay in business. When a house whose appraisal has been inflated is used as a comparable by other appraisers, those buyers will pay too much for homes, creating a domino effect."
· Layne Marceau, 2006 California Building Industry Association BIA chairman, said this about affordability: "For far too many California families, home prices today are simply not affordable, and even if the real estate naysayers' predictions of a drastic market correction came true, housing would still be unaffordable for most first-time buyers."
· Lance Caldwell, one of Portland's assistant U.S. district attorneys, had this to say about mortgage fraud: "It reminds me of the savings and loan crisis."
· Pat Berry of Virginia had this to say about the attempt to sell her home: ‘Our house has been on the market in North Springfield [near Washington, DC] since July 15. In that time, only two people suggested any interest by taking time to tour the property. My husband is due to retire on Sept. 30 and at that time, we will be carrying two mortgages on 1 and 1/2 incomes. Needless to say, my fingernails are chewed to the quick."
· Brad Monroe, the new president of the Greater Tampa Association of Realtors said this about the state of his market: "‘Inventory has quadrupled. Sales are off by 40 percent. There's downward pressure on prices. The speculators are gone, yet the building boom they encouraged is still evident. ‘There's a whole bunch of brand-new houses that have never been lived in that aren't selling
· Pam Canada is the executive director of the NeighborWorks Homeownership Center in Sacramento. Her non-profit counseling center used to receive two or three calls a week from homeowners in financial quicksand; now it's 20 a week. She had this to say: "‘It's remarkable, we used to take walk-in (clients), but we don't do that anymore. We just can't.'
· Brad Clarkson, President of Lifestyle Homes in Colorado had this to say about the affect of over supply on the labor market: "When you oversupply the market, you wind up putting people out of work. A lot of trades are having to reduce their prices to get their jobs, or they're shrinking their workforce and laying off labor."
· David Stiff, chief economist at Fiserv CSW, a property-data analysis firm in Boston said this about price declines: "There has never been such a quick deceleration in price appreciation. "I was looking at data from 1969 forward, and it's unprecedented."
These are, of course, just a tiny sample of the opinions and words of the people for whom the bursting of the bubble has become a sobering reality. In fact, these quotes are just from some of the stories that I've read over the last five days.
Named "One of the Most Inventive Small Companies in America…" by Inc. Magazine… And… …Has impressed the U.S. Government so much that they passed a law mandating that it continues to develop their technology. Read More…
Named "One of the Most Inventive Small Companies in America…" by Inc. Magazine…
…Has impressed the U.S. Government so much that they passed a law mandating that it continues to develop their technology. Read More…
I only stopped at this point because if I had included all of the quotes that I discovered, this story would easily run to over ten pages.
My point here, of course, is that the housing bubble is no myth. You might not see it where you live, but it's out there in neighborhoods all across the country.
And, dear reader, we are at the tip of the iceberg.
But there's one big difference this time. You see, you didn't hear it from me. You heard it from the people that are living it.
And if you don't believe them either, just listen to what Ben Bernanke said about housing just yesterday.
After all, it was the Fed, in many ways, that started it all.
Bernanke said, "There is currently a substantial correction going on in the housing market," and that the decline in residential housing construction is one of the "major drags that is causing the economy to slow."
"How far will this correction go? It is very difficult to tell, is the honest answer," the Fed chief commented later.
Gee, thanks Ben.
No wonder he went on to say his eight month tenure has been a "sobering experience."
Unbelievably, The Dow rallied to a new high in the wake of his comments.
To which a lot of folks said "Yippee"….but you didn't hear that from me.