The problem is that I don't know who to be angry at. All I know is that there's a lot to be angry about this Thanksgiving season.
Last night I helped a friend move out of his condo. His family purchased it while he was going to school as a way to build a little equity in hopes of using it to by a more permanent house after graduation. He bought it at a reasonable price - his mortgage costs were roughly what rent would have been (maybe a bit higher), but that's reasonable, right?
However, this was pre-boom times and as the decade progressed, those condo values ballooned, and buyers eventually were priced out of thse condos. That should have tempered the boom, right? Wrong. My friend knew something was up when renters were the only ones who could occupy these condos because investors were the only ones who could afford to buy and they were buying, inflating the boom further.
Unfortunately for him, he decided to sell too late and when he tried, there were no buyers. He kept dropping the price of his condo until the writing was on the wall and he knew he was entering negative equity.
He's now trying to short sell the condo for around $40,000. Can you imagine that? If you took out a 30 year mortgage for $40k, you're monthly payment would be $350 including taxes fees and insurance. The average rent in this area is at least double that (if not more). Is his condo really only worth $40K? Absolutely not.
Which brings me to my anger. From mostly around 2005 to 2008, things went absolutely haywire. Loan officers, landscape architects, real estate agents, anybody affiliated in any way with the real estate bubble were making a bunch of money. My friend told me that he knew a landscape architect working primarily in Anthem making $180,000/year at the peak. I knew someone who was refinancing mortgages as a side job and doubling her engineering salary while she did it.
This American Life covers all of this nonsense here.
What's sickening is that there are people still making a lot of money on short sells and foreclosures, profiting on the downside just as much as they were profiting on the upside. Its hard to begrudge anyone from making a bunch of money doing legal and basically honest work.
Its just disgusting how wasteful this all became. So many people were working really hard making a lot of money doing very little to produce stuff of value. It's true that we now have a sea of cookie-cutters sprawled across our beautiful desert. Some of these housing communities do have real value as people find a way to live and enjoy their lives in them. Some now are decaying unoccupied awaiting foreclosure.
What would Phoenix have been like if people bought homes they wanted in communities they loved. If homes were bought to live in and not to flip. If people transformed their homes into something they love instead of something they think would be the easiest to sell. If people saved and spent their savings to re-furbish older homes in core communities closer to where they work and played.
We're in the mess because so many people thought they could get rich off their homes or other people's homes. And our politicians thought that if you just deregulate everything you can prosper.
But prosperity takes work and discipline. We need professionals and craftsman building and creating art. Making things people love. Our politics should reflect that.