I am taking a real estate licensing course in Connecticut. The textbook, published just two years ago, is Modern Real Estate Practice, and last night we covered Chapter 3 entitled "Concepts of Home Ownership."
One sentence sent a chill through me. It read: "Because more homeowners mean more business opportunities, real estate and related industry groups have a vital interest in ensuring affordable housing for all segments of the population."
There, in a nutshell, is the housing and economic mess. The culpability of mortgage lenders, investment bankers and Wall Street brokers has been well covered if not largely understood. From the couples who knew they were borrowing more money than they could afford to the Countrywide salesmen who preyed on others who could not afford their loans, the story is one of greed up and down the line.
It is generally understood that the housing crisis triggered the overall
Over the last two years, I have written here often about the hyperactive optimism coming from the economists at the National Association of Realtors. Abetted by the media, David Lareah and Lawrence Yun, the NAR's spinmeisters, defied all logic and proper warnings from smart people like Yale economics professor Robert Shiller. They kept pumping out sunshine about how home prices would continue to defy gravity, no matter the strong evidence to the contrary. Shiller, you might recall, wrote the book "Irrational Exuberance" about the stock market, and he saw the housing market in just the same light, warning that home prices and loans were out of balance with the incomes necessary to pay off the loans.
I'm more Joe Six Pack than economist, but last December 30, after yet another Pollyanna prediction by the NAR, even I figured out that the NAR economists were selling snake oil. I wrote here that, "Asking the National Association of Realtors about the real estate market is like asking McDonalds about obesity. You are never going to get a straight (read ‘honest') answer."
And yet the media continued to serve up the NAR's Kool Aid, and the NAR's members continued to raise their glasses in a toast to exuberance. Whether it was true or not, it sounded good. Well, the band on the Titanic sounded good too, but the ship was still clearly going to sink.
In my class, we have only covered half the real estate textbook, but I have thumbed through the rest of its pages. There is no chapter on logic. There should be.