By Joe Bageant
A friend in the mortgage business tells me he gets calls every day from
people who want their house repossessed -- people want to walk away from
those monster-bellums in which they have zero equity, thanks to the
interest only and zero down loans the industry pushed in an effort to
blow up the housing balloon for all it's worth. "Hell, I tell 'em to
sit tight, stay there, because we are six months behind in repos and
besides, we may be able to sell them on a negative amortization loan.
Let 'em pay what they can and we refi the difference. In other words,
their debt just gets bigger as they pay, but they stay in their houses
and their kids stay in the same schools."
Now that's a pretty scary economic picture to anyone with the sense god gave a soggy animal cracker. Right? Not to most sellers I know. Despite that this town has more for sale signs popping up like weeds, everyone is still going to make money on their home when they sell it. Including my own household. Here's a conversation slice from around my own kitchen table: "We paid $120,000 for this house eight years ago. I don't think $395,000 is unreasonable. The people who make enough to buy this house are all over toward Washington, DC and they want to live out here." Or "The Fed did not raise interest rates last week, so more people will be buying now." And "If we don't sell it, we can remodel instead." And I think to myself, "If Sisyphus had a wife, she would be looking for a bigger rock."
It's no wonder we can sustain our magical thinking until the very last minute of undeniable truth. We get lots of support in our delusion. Commuting to work I recently heard NPR's marketplace reporter tell listeners, "It's not necessarily a collapse, it's more of an impasse, a stalemate. Neither sellers nor buyers are budging from their original positions. Things will eventually loosen up." Sometimes a car radio can be an instrument of torture for the driver. So, if you saw a red faced old man pounding the steering wheel and cussing, it was probably me.
I arrived home and got another blast of this senseless optimism, when the vivant divorcee two houses down the street waved sunnily, her own for sale sign in the background. She is holding out for a half a million-plus for a home worth maybe 200-K objectively speaking. "Oh, but this house is special," sellers such as her say. Every one of them is convinced that the collapse of the housing bubble can never reach them because they are inside a snow globe reality, one allegedly protected by the wealth of the nearby nation's capitol. "DC money," they call it. Those high federal career incomes. Somewhere inside their heads a voice whispers, "There is always wealth in Rome." As if the entire population of DC were dying to live here in a town with no real culture, a poor school system and the longest commute possible to the federal city.
And so it goes along, this magical thinking, or more accurately, the great lie that the consumer is the prime mover and controller of all markets Planet Kapital, even as the national housing supply passes the seven month mark, and what few houses are under contract are linked in a daisy chain of contingency sales stretching back two-deep into a swamp of optimism.
Even I am convinced that we will come out ahead on my house. Eventually. Magical thinking comes so easily here in the snow globe Empire. It's harder to fight it than it is to watch the pretty flakes settle on all those for sale signs.
After all, there is still yet boundless treasure in Rome.
