Stephen Yeargin

A Nashville, Tenn. resident writing mostly about politics, news media, technology and hockey.

A few years ago, I remember reading a lot about the housing market was wildly inflated. That is to say, a house that would have sold for $60,000 a decade ago now lists for almost double that today. “Real estate investor” became a full time job for many, buying houses, making minor cosmetic changes and selling for a large profit. At the time, pundits speculated that the market could not sustain the pace, and eventually a correction would be in short order. The American psyche does not care much for pessimists, so these warnings went largely ignored.

In related news, I read how people my age went out and took out more of a mortgage than they could ever afford to buy more of a house than they would ever need. They lived the American Dream by living in very nice, quiet neighborhoods with the best school systems. Mortgage brokers sold them on that dream, and why not jump on in? It looked like a win-win proposition for a generation that has never gone without. The house and yard were something to be proud of; the next goal (45 years off) was retirement to live exactly like they were living at that moment in time, less full-time work.

Fast forward to today. Housing prices are tumbling as those still left in the market are struggling to break even or cut their losses. My home state of Tennessee has seen a month-over-month increase of about 33% in foreclosures, almost double the year prior. That translates 4,639 people losing their property in August with 244,000 nationwide in that same period. Here is a tough fact for many: rural America may not respond immediately to economic upswings and downturns, but they are often hit hardest.

I am not an economist, so I have to rely on the opinion of one to get a firm handle on where things went wrong. We can lay blame at the feet of government, but I strongly believe that the problem is a lack of common sense.

  • The so-called “real estate investor” should not be fleecing prospective buyers into thinking that a coat of paint and mulch in the front yard is worth an extra $20,000.
  • The twenty-something should not be of the mindset that their entry-level jobs can pay for a house with a two-car garage and five bedrooms in a neighborhood that requires a membership fee.
  • The mortgage underwriter should have enough sense for his or her company’s future to not advise the aforementioned twenty-something to pay for it on an adjustable rate mortgage.

My wife and I rent an apartment that is probably more than we need, but well within our budget. The marketplace is not particularly kind to first-time homeowners right now, so we are not quick to become them. I have to wonder if the people that have suggested we hurry up and buy are in some small way wanting us to share in the “fun.” We do intend to buy within the next two to three years, but not before the lessons of today finally sink in for all involved.

2 Responses

  1. Samantha says:

    The twenty-something should not be of the mindset that their entry-level jobs can pay for a house with a two-car garage and five bedrooms in a neighborhood that requires a membership fee.

    Especially not when they took out the full Stafford loan amount each semester they were an undergraduate, AND were on the fifth year plan, AND bought a huge engagement ring while still in college, AND had to charge a lavish wedding, AND had to have the week-long tropical honeymoon … and new cars when they got home, because they’re college graduates after all.

    When I plan promotions, I refer to this as the “flattening consumer culture.” Hundreds of television channels and the internet mean exposure to a level of luxury that people just didn’t imagine decades ago ?¢‚Ǩ‚Äú or, if they did, they understood that they could not afford it (at least, in some cases, not all at once). And there are people who have made it their business to encourage this rampant irresponsibility, as you noted when you mentioned underwriters, without so much of a thought even to how much it will affect them.

    Free market capitalists always say that the market will find balance and doesn’t need restrictions. They are dumbasses ?¢‚Ǩ‚Äù while the market will correct itself, without laws to force it into gray areas, it will flagellate wildly in a tall sine curve of highs and lows.

  2. Aunt Donna says:

    One problem might be too, that the twenty-somethings aren’t willing to wait, they want EVERYTHING NOW!! I would alot rather start out small, sell big, and buy bigger, than buy the biggest and have it all taken away!
    This from someone that does NOT have a college degree, but I think I DO have some common sense and the knowledge of AGE!
    I have to admit, you and Samantha are using your ‘college educated’ common sense!