{"id":3923,"date":"2008-08-16T09:59:59","date_gmt":"2008-08-16T16:59:59","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=3923"},"modified":"2008-08-16T09:59:40","modified_gmt":"2008-08-16T16:59:40","slug":"what-went-wrong-in-the-real-estate-market-we-told-homeowners-to-treat-their-homes-like-securities-investments-and-they-did","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3923\/what-went-wrong-in-the-real-estate-market-we-told-homeowners-to-treat-their-homes-like-securities-investments-and-they-did\/","title":{"rendered":"What went wrong in the real estate market? We told homeowners to treat their homes like securities investments — and they did…"},"content":{"rendered":"

This is my column for this week from the Arizona Republic<\/i> (permanent link<\/a>).<\/p>\n

As a matter of eating crow, I will attest that I publicly denied that housing prices could ever behave like securities prices, falling far below their fundamental value. The market has proved me wrong. We’re writing contracts on REO properties where the purchase price is well below the replacement cost. I read a listing for a potential rental property in a not-awful neighborhood that is selling for $49,500. We anticipate prices like that in premium rental neighborhoods when the Ameridream\/Nehemiah calliope grinds to a halt. A house in Detroit was listed last week for one dollar. This bust behavior is just as irrational as the boon behavior — and it is a choice opportunity for people who are not<\/em> irrational. Nevertheless, I was wrong. The real estate industry told buyers that homes were an investment just like securities — and damned if they didn’t believe us.<\/p>\n

 
What went wrong in the real estate market? We told homeowners to treat their homes like securities investments — and they did…<\/strong><\/p>\n

If you were to turn back the clock on the Phoenix real estate market by four years — that would be just about right.<\/p>\n

Judging by prices for bread-and-butter homes, it’s just as if the last four years didn’t happen. The average stucco and tile suburban dream home sold in July of 2008 for almost the same price you would have paid for it in July of 2004.<\/p>\n

A lot has happened since then, of course. The 1,400 square foot single family home you could have had back then for $150,000 soared to $250,000 by December of 2005. That seemed like $100,000 in free money, and, regrettably, many people borrowed against that paper equity in their homes. Even if they did not, it has proved difficult to eradicate that entirely imaginary $100,000 from list prices.<\/p>\n

The real estate market got hammered good and hard by two very bad ideas. The first is that homeownership is an unlimited good, that everyone should own a home regardless of their circumstances. Governments — and the National Association of Realtors Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

This is my column for this week from the Arizona Republic (permanent link). As a matter of eating crow, I will attest that I publicly denied that housing prices could ever behave like securities prices, falling far below their fundamental value. The market has proved me wrong. We’re writing contracts on REO properties where the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,26,6,5],"tags":[],"class_list":{"0":"post-3923","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-investment","7":"category-lending","8":"category-marketing","9":"category-real-estate","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":3363,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3363\/dont-learn-all-the-wrong-lessons-about-creative-mortgages\/","url_meta":{"origin":3923,"position":0},"title":"Don’t learn all the wrong lessons about creative mortgages","author":"Greg Swann","date":"July 15, 2008","format":false,"excerpt":"This is my column for last week from the Arizona Republic (permanent link). \u00a0Don't learn all the wrong lessons about creative mortgages Arguably, the Phoenix real estate market is in a state of incipient recovery. Will there be more bad news? Certainly. There are still thousands of homes stuck in\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":820,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/820\/real-estate-the-big-ballers-crap-shoot\/","url_meta":{"origin":3923,"position":1},"title":"Real Estate: The Big Ballers’ Crap Shoot","author":"Brian Brady","date":"December 30, 2006","format":false,"excerpt":"My hands were sweaty as I nervously darted my eyes around the craps table . I was the pariah because I was \"betting on the don't line\". This particular strategy can be extraordinarily frustrating when a table gets hot. It requires a bettor to double up his stake each time\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4045,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4045\/buy-low-sell-high-you-cant-sell-high-for-now-but-prices-are-low-enough-that-a-buy-and-hold-strategy-could-pay-off-handsomely\/","url_meta":{"origin":3923,"position":2},"title":"Buy low? Sell high? You can’t sell high for now, but prices are low enough that a buy-and-hold strategy could pay off handsomely","author":"Greg Swann","date":"August 23, 2008","format":false,"excerpt":"This is my column for this week from the Arizona Republic (permanent link). \u00a0Buy low? Sell high? You can't sell high for now, but prices are low enough that a buy-and-hold strategy could pay off handsomely Last week I met with a potential real estate investor. She's an investor because\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":115,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/115\/apartment-rental-rates-in-valley-surge\/","url_meta":{"origin":3923,"position":3},"title":"Apartment-rental rates in Valley surge","author":"Greg Swann","date":"July 21, 2006","format":false,"excerpt":"I was wrong. The Republic did cover the increase in apartment rents corresponding to a drop in vacancy rates. And only two days later than the Las Vegas Review-Journal. Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":18355,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/18355\/overnight-news-painful-advice-for-pained-landlords-stop-being-a-bottom-feeder\/","url_meta":{"origin":3923,"position":4},"title":"Overnight News: Painful advice for pained landlords: Stop being a bottom-feeder.","author":"Greg Swann","date":"July 31, 2021","format":false,"excerpt":"The CDC's completely unconstitutional eviction moratorium ends tonight. I am innocent of any first-hand experience with this mess. We didn't miss a payment on the rental homes we managed, and we sold three tenant-occupied homes \u2013 allegedly the third-rail \u2013 for top dollar, with no trouble. Linked below, the Foundation\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"Ya think it's easy?","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":3253,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3253\/investors-are-coming-back-to-the-phoenix-rental-home-market-and-with-the-right-business-plan-theyll-make-money\/","url_meta":{"origin":3923,"position":5},"title":"Investors are coming back to the Phoenix rental home market — and with the right business plan they’ll make money","author":"Greg Swann","date":"June 21, 2008","format":false,"excerpt":"This is my column for this week from the Arizona Republic (permanent link). \u00a0Investors are coming back to the Phoenix rental home market -- and with the right business plan they'll make money Rental home investors are coming back into the Phoenix real estate market, and this is a good\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3923","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=3923"}],"version-history":[{"count":2,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3923\/revisions"}],"predecessor-version":[{"id":3924,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3923\/revisions\/3924"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=3923"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=3923"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=3923"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}