A Nation in Crisis

Alert! Alert! America is in the midst of a housing crisis! Run for the hills! We're going under!!

I don't know. Sometimes I think I'm beneath the average intelligence. I don't understand some of the things that appear purely obvious to the average person. Take this housing crisis as an example. I don't get it.

According to one article, housing prices are "in freefall." "Two and a half years of price increase – wiped out." Apparently it is a product of the credit crisis. You see, foolish lenders offered foolish borrowers foolish rates. The foolish borrowers are failing to keep up with the foolish rates and the foolish lenders are suffering the consequences. Meanwhile, the foolish borrowers are losing their houses to foreclosure. So with all this foolishness, credit has become tighter and "predatory lending" has come under scrutiny. In other words, lenders are trying harder to only lend large sums of money to people who can pay for it. That's a "credit crisis". Of course, this crisis has ripple effects. I don't mean to oversimplify. But that's the gist of it. So, with less people qualifying for loans and more people losing their homes, there is a decrease in home purchases.

What I don't understand is why there is a housing crisis. Here's what I'm thinking. Why do people sell their house? Well, there are several possible reasons. Some people have to move for employment reasons. Their company has moved or they've accepted a job elsewhere. That makes sense. Some people have to move because their family situation has changed and they've outgrown their home. That makes sense. (According to statistics, however, Americans are having fewer and fewer children, so that one is likely to happen at a lower rate.) Some people have a change in financial conditions. Perhaps it has improved and they want to move up. Perhaps it has declined and they can no longer afford what they have. Either way, selling is the way to make the change.

Those are the most common reasons for selling a house. I'm sure there are more. There is, however, one that is extremely common that I missed. It is perhaps the most common in my area and, as such, perhaps elsewhere, too. That reason is "investment purchases." I live in a relatively nice neighborhood. The houses in my area are all less than 3 years old. It's a quiet neighborhood, relatively crime free, with decent schools nearby and a decent environment around it. My wife and I sold our condo in California and used the profit to buy into this nice place in Arizona so she could quit work and we won't have to move again. We like it here; we're staying. So why is it that easily a quarter of the houses in my neighborhood are for sale? Perhaps one or two have moved job locations. It is possible but not likely that one or two have outgrown their houses. There are likely one or two foreclosures. However, the most common reason for selling a house in my neighborhood is ... profit. These people bought these houses as investments, and they're just trying to get their money out of them before the prices drop below what they paid for them. Many of them have never been lived in. Some had their owners move in due to purchase restrictions and then move out a couple of months later. I know of one guy who bought two in the neighborhood, lived in both of them (one at a time), sold them both, and moved to another neighborhood. (Whether or not he's still selling and buying I don't know.) Whatever the other reasons, easily more than half of the homes for sale in my neighborhood are investors trying to turn a profit. These homes for sale show up on the lists of houses not selling and add to the "housing crisis". In other words, because investors (read "gamblers") made a bad investment and are in danger of losing their profits (read "winnings"), we're adding to the terror called "crisis".

There is no doubt that there is a credit crisis and a housing crisis. People are losing their homes. People are finding it harder to get loans. But I wonder if the fix is a financial one. Is it possible that the problem is not financial, but a problem of culture and character? What drives a person, for instance, to lend money foolishly? Isn't it a drive to make money? And what drives a person to borrow money foolishly? Isn't that a product of the generation today that doesn't understand "delayed gratification"? Isn't that, in fact, the underlying problem behind the credit crisis at all? And what about the housing crisis? Are there less people in the country who need houses? No. Are they leaving their houses in droves to head for apartments or other rental living? No. It seems instead that we've created a more mobile society. No longer do we have careers; we have jobs. It is considered unthinkable by most today that one would have a career at one company for their entire life -- unthinkable by the working people and unthinkable by the companies that hire them. No longer do we have a family home. You know the kind. It's where you live your entire life. Your kids grow up there. When they move out, they still come back there to visit. When the parents get old and go to retirement or pass on, it is difficult for anyone to think of selling the place because it's ... home. In other words, we've created an unstable society that thrives on the here and now and succumbs to whatever it wants when it wants it. Is there any wonder that this society would have credit and housing problems?

No ... too easy. It can't be like that. See? I just don't get it. All this stuff seems to be beyond my comprehension. So my wife and I will just stay in our home until we can't get around anymore. I'll hope to work at the same place until they make me retire. We'll just live out our poor, backward lives without comprehension of how much better it would be if we could change houses and jobs and everything else every two years or so ...

My, my, it's shame to be so contented ...