Subprime or About Time

The Grinch
The Grinch

I'm getting a little annoyed with the premise that the subprime mortgage crisis and tightening lending standards are wholly to blame for the current headwinds in housing. Of course, they are contributing to the problem, and of course, it's important for us to keep on top of regulatory and institutional changes in the mortgage market. But here's the thing: I think we might be missing one of the boats in the blame game -- specifically, greed.

Blame it on the bankers, blame it on the "exotic mortgage products," blame it on the no-lose scenario that a big, happy thing like a home would seem to embody. Now we have to continue month to month, as sales and price forecasts get revised lower and lower, and predictions for a recovery push farther back toward the horizon, stating the obvious: "Housing activity this year will be somewhat lower than in earlier forecasts, with clearer analysis of the effects of stricter lending standards and a decline in subprime mortgage origination, according to the latest projections by the National Association of Realtors." Yada yada yada.

I want to talk affordability and I want to talk greed. As home prices climbed higher during the heady days of the housing boom, affordability crept lower, and -- inexplicably -- more people decided to get in on the game.

Yes, the mortgage products offered the venue, dare I say, and loaded buyers right on the bus to home ownership. But investors, speculators and everyday folks who wanted to live beyond their means bought into the products without looking back.

Now all those same folks have a big welt on their wrists where they got slapped. They finally see that what goes up must come down, even in the big, happy land of green-grassed neighborhoods and glitzy, glam condos... and they're getting out of the game.

So just for once I would like to see one of these industry forecasts -- one of these monthly economic indicators, one of these pandering press releases -- state more than the obvious, that the housing slump continues because of changes in the mortgage market and changes in the attitudes of greedy Americans who are taking a temporary breather, before moving on to the next "sure thing."

Questions? Comments?