Categories:
Latest Articles:
Stats:
- Entries = 173
- Notes = 25
General Links
Thru the roof!
Wellesley College economics prof. Karl Case, of the Case-Schiller Housing Index (now owned by Standard & Poor) told this story to Wellesley MA town mtg. a few years ago.
The spectacular rise in housing prices began in Wellesley in 1979 when a Wellesley realtor told a seller that if they wanted to save the cost of paying the capital gains tax on selling a house, all they had to do was front-end it onto the asking price of the house, effectively sticking the buyer with it; they did & the housing-sellers' boom began. How did they get away with it? The "location, location, location" mantra worked well as an appeal in a town everybody wanted to move into - at any cost. Of course, once other realtors saw that it worked, it spread nationally. Case disapproved of it: your house is not a speculative instrument, it's a utility you pay to live in & you get the pleasure of living in it - for a price.
Wellesleyites, well-known as capitalist fanatics, laughed him off, mo' money their shameless capital-mantra, now everybody's. It's driven housing prices thru the roof, but now the capital rain's falling & it looks like everybody's taking a bath.
A self-professed Libertarian I once knew pseudo-sagely said "My house is my savings account. " I replied: "If the bank doesn't repossess it." The banks play to win, if possible; sometimes they temporarily lose, sometimes you lose completely. Can you keep your job & pay the mortgage? Even if you re-fi? If you can't, you lose & the bank gets to write-off & spin-again. He assumed that can never happen, of course, but it's happening now as fanta$tical-capital chicken$ come home to roo$t, taking even the big lender$ way down. Head$ are rolling.