Everything has its price. Even money.
When subprime was king just a short while ago and my 10 year old son could have been approved for a home loan, many were reveling in the cashflow. And who could blame them? People were willing to pay overinflated price tags on homes, and lenders and agents were the major beneficiaries.
And the result?
Foreclosures are the order of the day and we're back to the real basics of doing business...as it should be.
There's a great article on the cause and effect of the rise and fall of real estate values that I came across this morning in Working RE Magazine: http://www.workingre.com/workingre/rise-and-fall.html
Perhaps my favorite excerpt is this: "Besides the fact that money became “cheap” when the Fed lowered rates, it also became more available because lending practices loosened. Irresponsible changes occurred, such as the Fed’s reserve requirements for banks, which were loosened in the late 1980s, allowing banks to keep a lower percentage of deposits and therefore lend a higher percentage of their funds."
It all comes down to this. There was an opportunity to stretch the rules and limits to make more money, and many jumped on the bandwagon. Now we have the repercussions of those decisions and many are waxing philosophic about it rather than just acknowledging what's right in front of us.
Greed drove the housing bubble. Period.
I will be the first to acknowledge that hindsight is 20/20. I will be the first to acknowledge that no buyer was forced into the mortgage situation that now has them staring at foreclosure.
I will also be the first to ask at what point we put the client's needs first. REALISTICALLY.
Had that been done, there would have been no bubble. The bubble was of our own creation as an industry (mortgage and real estate) and now we're dealing with the consequences.
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Hi Mar;
Great Post! I did read that article Working RE Magazine, very god article.