4 know-it-all renters discussing the subprime mortgage fiasco

Sam: California created the subprime lending fiasco in my opinion. Nothing but a bunch of greedy assessors, home sellers and real estate agents running a scheme which caused the entire nation’s real estate market to collapse.

Here is how it happened:

When people’s homes have a lot of sentimental value to them they naturally want to get as much as possible from selling it, even if it is just a piece of shit house with a lawn that’s gone to pot. They hope that by making a profit on their home they can retire to Vegas or Florida.

Secondly, assessors and real estate agents who have an inflated sense of importance when it comes to their “exclusive” suburbs drive up prices with their delusions of being the next best thing behind Beverly Hills. “Pish, we have a swim and tennis club in our community and some of the nicest Brady Bunch houses this side of the Rockies, pish,” they say. They get a sense of satisfaction sitting around Starbucks bragging about selling a $900,000 bungalow. And all the people in town get a good feeling knowing that their neighborhoods are increasingly becoming richie rich towns. Just think how much your own importance would get a boost knowing that the house next door to you just sold for a million dollars. And also consider how rich you would feel if you were able to casually say, “We just bought our first home for $1.2 million. Yeah, the market’s kind of high these days, isn’t it?”

Nope.

So they essentially created a bubble which their sorry upper middle class asses couldn’t sustain. The only ones who benefitted from this were the people who were able to sell and make a huge profit on their homes while the prices were the most inflated. But, unless they moved to an area where the cost of living was far less than where they previously lived, they probably ended up putting all that extra money into their new home (which wasn’t much of an upgrade in the first place). Now with the economy tanking and retail stores folding, people aren’t going to be able to afford those mortgages which made them feel so rich and important in the first place. With no job (not even a Starbucks barrista job to temporarily hold them over) they are going to all be living in their cars pretty soon.

Dougan: The assessors and real estate agents also got rich from this too. But now most of them are either out of a job or they’re selling foreclosed homes for less than market value. Not a lot of commission to be had doing that, is there? And as they were profitting from their scheme they all probably bought BMW’s and giant mansions which are only half paid off now. Oops!

Gregg: It’s kind of like the idiots who sell used automobiles via the classified ads. Some bumpkin wants to get as much as he can for his truck because he needs the money, so do all the other bumpkins selling their cars and trucks. Pretty soon the common assumption is that a 2001 Ford pickup with 100,000 miles on it is worth at least $11,000. There is probably a mathematical way to come up with a price for a used automobile, but everybody ignores that method and just goes with their gut on how much they think a vehicle should cost. Even the guy who knows that his car or truck is only worth $1,500 doesn’t want to be the one in the classified section with the lowest advertised price. Doing so would make him look like a schmuck or an unsavvy business man with no common sense.

Apply this to the inflated prices of homes in CA and all across the country and you can also see how we got to this point.

Brian: Sad thing is that the prices are going to come down, but not to the level they were before this all began. As a result the average price of a home in America will be slightly (and in some cases significantly) higher than before the subprime crisis. Young people should consider this when they think about going into a profession. Do they want to be business professionals and realize the dream of owning a home, or do they want to be social workers or teachers and possibly rent for their entire lives?

Dougan: Like us.

Everybody: Yeah, like us!