Credit and Blame-The Real Estate Debacle

Every once in a while, someone tells a story to you just as a part of their experience. Or tells you what someone told them. This is one that came from a golf course conversation. Mr Pokergirl was in a late afternoon foursome and one of the players was a builder. Not just a builder, but member of a family of "mega builders" who live elsewhere. Mr MegaBuilder told Mr P that since Clinton loosened up the requirements for home loans, the mortgage companies that handled Fred/fan money PUSHED them to build as fast as they could. It was a RUSH to finish houses that the buidlers knew their buyers couldn't afford. But the mortgage company kept demanding more houses for more and more unqualified buyers.
It made me wonder about supply and demand in houses. It's only logical that a cheap mortgage is desirable and might actually make someone rush in to buy a house. But houses are HUGE responsibilities- no more landlords. Just you. When my youngest child was desperate to buy his first (so far) condo, I kept asking him was he SURE he wanted to own something. I explained the cost of insurance, taxes, maintenance, remodeling, and then showed him the vast amounts of interest he would pay over the years, and what his return (when he sold) would be. Much less than he would think. But he took the jump at about a 6% 30 year fixed and though his condo might fall in value, he is still happy to own it and live in it. He feels more settled. But the fact is, houses that do NOT always massively appreciate, can end up costing you money if you actually add it all up. Huge appreciations in houses began in the late 70s- up until then, houses were houses. Not huge investments. Renting is really a better deal. No interest payments. No wondering about when or if to move. Freedom to leave.
Houses in my area are still very expensive. There is no where to go- the place is pretty isolated between mountains and forests that cannot be taken over. The rest is built on. BUT, having sold a house here and bought another, I can give you a fair idea of who might have a good deal of blame for putting people in houses they can't afford- REALTORS and APPRAISERS.
No on seems to be talking about them, but this is the connection:

For years, the monopolistic real estate industry has price fixed their commissions, informed you that you can't actually sell a house without them, set your price with comparables that other realtors have set prices on, then fix you up with a mortgager and appraiser. So that you, the seller, have very little say. There is no FREE market pricing of real estate. You delightedly come up with a price the comps in your neighborhood have, mentally count up your windfall, vacuum and let the victims arrive. Someone takes the bait, because realtors really want you to believe your house has appreciated like that, and then comes the fake inspection, and the fake appraisal. Oh yes, I AM saying it. The inspection says he is inspecting- but if you read the fine print, the inspector says they aren't RESPONSIBLE for what they write. I mean, they are inspecting the largest purchase you ever make, why would that $300-$500 for an inspection actually be meant to be accuracte? Then the appraiser comes, and lo and behold, your house actually appraises to the PENNY to what the sales price was! "Well, I do declare!" you say.
Of course, you have to go find another house for which the same collusion and fraud have taken place. But you'll find it. And the same situation will occur over and over again. Until, at some point, the poorest people are put in their first starter home- that costs 250,000! That is SOME starter home for a poorer person. Is that the fault of "the rich"? NO. Is that the fault of "the current president of the US?" or rather "he should not be named". NO. But it is the fault of a congress that only wants votes from poorer people and thinks putting them in houses they could NEVER afford rather than decent lower cost low income housing will get them those votes.
Though I believe in the indictment of Bill Clinton, Barney Frank and others for fraud on the American people. I also believe that the entire realtor, appraiser, inspection and mortgage industry should be taken apart until home ownership goes back to being the right of people who qualify. And home prices may take a serious jolt, which will make homeowners such as myself very angry indeed.
If realtors weren't motivated by a sales commission based on a selling price, the continual jacking up of prices of houses anywhere would not have taken place. Sellers would set their own prices and sell at that price. Of course, realtors will tell you that the seller ALWAYS sets their price. But by appealing to human greed- the sellers and the realtors- the price will always be set as high as the realtor feels they can get it. The appraisers need to be investigated for appraising homes at the exact sales price! How is that possible?? And the home inspection industry which literally only looks at things with a flashlight needs to be investigated. Cleaning out THOSE closets would help us all feel better about housing.
If home prices weren't so steep, still in most parts of the country, and if the real estate market was allowed to regulate itself, we'd all be better off. And if the fred/fan money wasn't so easy, so loose and so promoted, people who didn't belong in houses wouldn't BE in houses. Housing has not proven to be the solution to poverty- but it can be the CREATION of it.