Bill,

History tends to repeat itself, and we hope it does not this time...A

Not sure ...crystal ball is very foggy...hoping not to the degree we saw it last time.

Hi Bill- unfortunately and as Ron and Alexandra Seigel said, history does repeat itself. We have a bad habit of not learning from the past and letting $$$ or those with it rule. 

Bill Roberts hi Bill... the one thing that keeps me more positive is that the last time the housing market crashed we had plenty of inventory and lots of speculation driving prices up. Now we have no inventory... it's all supply and demand and there's little supply. I don't see speculation in my market on the whole.

Bill good account of what happened, but you left out the role Realtors/Agents played in all this, by convincing Buyers to purchase properties they new were over priced, and pressured Lenders, to pressure Appraisers to make the numbers work.  If one Lender could not get the loan done, Realtors directed their Buyers to another Lender, until they found one who would do the deal. 

There was a lot of blame to go around and everyone needs to own up to what took place.

Bill I agree with you that the little guys (Realtors, Loan Originators, Appraisers, etc.) did not receive the major part of the wealth.  However, Realtors, Appraisers, Loan Originators, etc played a major role as pawns in the transfer of wealth.  There were a number of loans I lost during that time, because there were Loan Originators willing to fudge the facts, and Realtors who were all to willing to connect their Buyers with these less than ethical LO's.  I was told more times than I would like to hear from Realtors, if you will not do it I will connect them with someone who will.

I like to sleep at night so I walked away from the temptation of a commission check, but there were Realtors and LO's who wanted that commission check no matter what, and as a result were a major reason in my opinion in facilitating the transfer of wealth you refer to.
 
If we do not want the transfer to happen again, then we need to refuse to be participants in the transfer.

I don't understand real estate from an economic point of view - I just try to sell homes and make people happy - but you've painted a scenario that will leave many people unable to retire.

Good morning Bill Roberts - as Ron and Alexandra Seigel noted history does tend to repeat itself.  We will see and hopefully we don't have what we had before.

..... well Bill, not so sure about that. We may have a situation where the tail wags the dog. And the narrative by the lack of knowledge of the free talking media heads.... well, you know how this goes... blah, blah, blah BS and more BS, lies and made-up stuff. And this whole thing about the market is getting 'politicized' just in time to prep for the next election - manufactured events. Just to prove a point. The American economy has never been better, historically, and neither has in my state. We re running on all cylinders.

Of course, that pisses-off of a lot of people.... Lets not be fooled.

This old-school thing of history repeats itself is for the birds.

None of the economic indicators favor anything remotely close to that in support of anything like a recession and/or a crash, same with the mortgage industry barriers - yet many in the media are trying to sell us the idea. They want it to happen. Timely, isn't?

Bill, I think the biggest problem last time was (with government encouragement) lower credit requirements. Candidate Harris has been talking about doing it again! That troubles me more than anything!

I agree with Richard.  As  a former banker, securities licensed insurance agent, and formerly married to a stockbroker/manager, I agree that a lot of realtors didn't know what they didn't know. 

They had no idea that junk bonds were packaged as A paper, being sold on Wall Street inside mortgages.  They had no idea what they were promoting.  There were so many misinformed others in the market and buyers became ULTRA GREED!   

Joe Q Buyer directed the traffic and became an investor even though he didn't know what he was doing.  It was a royal mess!  I'm thankful not to have participated!  And now, I tell my clients that there are many fail-safes in place that would prohibit the major housing recession, but I DON"T have a crystal ball either.  I don't enourage any sale that isn't needed.  Could I make more money - you bet.  But I also sleep at night!  

Maybe some of those buyers shouldn't own homes if they don't have a good credit, don't qualify for a mortgage.  So many shouldn't have qualified in the hay day!  Privatizing might help with renovation loans. 

That's a good question Bill.  I do know that renovation loans charge higher interest rates and fees to add energy efficient features to a mortgage - why?  That only keeps people from using the program.   A year ago I helped  a veteran buy his first home.  I ordered an energy audit, used the audit and life-cycle cost of the features to prove they could add them to the mortgage.  The veteran ended up with a more energy efficient home with sealed ducts, more insulation and sun screens on the south and west facing windows. His energy reduction was more than the cost to add the features to the mortgage.  Pretty cool.  I'd like to help more people use that program but again, the fees and higher interest rate keep folks from doing it. Makes no sense!

Great analysis.  But this go-around does not have any of the previous issues as before: anyone who breathed could get a mortgage, builders were constructing specs out the kazoo, etc.  Yes, interest rates are low but I don't see the massive flipping and blow out with product everywhere.  We have tight inventories and builders can get loans to build specs ahead of demand.  This time around it isn't approaching anywhere NEAR the death throes of the last recession and the signs are just not the same.  I don't understand why the media is cautioning us about a recession.  If so it is a stock market construct, I think, that is due to a constant rise in value with little setback.

Thanks!

Bill, interesting "crying wolf post" I think we are a few years away from your theory, because I can not have my dog get a $1million loan without  a credit check as in "stated income", nor can my cats refinance the house without  income verifications... but don't mind me I suffered more in the last turn down because I had integrity....Endre

I don't think any lessons were learned last time...b/c you are right, it's happening again.  I want to buy a small starter house NOW and keep it around for my kids..so they have a place to live if needed one day.  Even if prices go down, wages have not and will not ever again keep up with inflation.

I hope we are not going to become a nation of renters, but I sure do see signs we are headed in that direction.   I see more apartments being built than starter homes ( don't see any George Baileys out there).    

Also no money down loans, or little money down loans and these will be easy to walk away from if the housing market takes a dive.   Banks, lenders will win again.