Academic

THE HOUSING COLLAPSE: As far as I can tell, it?s caused in no small part by idiots. At both ends. ?

By Glenn Reynolds

THE HOUSING COLLAPSE: As far as I can tell, it’s caused in no small part by idiots. At both ends.

I’ve learned this by watching HGTV. On the one hand, I saw a rerun of a show on people buying their first house the other night. It was from 2007. The buying couple paid pretty much the asking price for an overpriced home. (Wife: “I think we’re getting ripped off, but I really like the house.”) Then at the closing they did a 100% loan.

Meanwhile, today on Real Estate Intervention, we see people who want way too much for their houses resisting any suggestion that they should drop the price, and hence having trouble selling. Watching them argue with the expert is simultaneously hilarious and infuriating.

People who paid too much for irrational reasons. People who ask too much for irrational reasons. Not surprising that things aren’t going well.

UPDATE: Reader Rhonda Ulen writes:

It’s really funny to sit here and read your posts about HGTV. I have been watching it for several years now and it was mind boggling to see what some of these people paid for homes all across the country. The big light bulb moment for me came when a “My First House” buyer who lived in California, wanted to move to Denver and buy his first home. He had no job, no money down and really bad credit. Yet he was still able to buy a house for over $250,000 in Denver at 14% interest rate. Both his mortgage and down payment were financed at this rate. I knew then something really bad was happening in the housing market. My husband and I steered clear of any investments remotely tied to mortgages and we still have our money. I still watch HGTV now and especially like “Real Estate Intervention”. That guy knows his stuff.

Indeed.

Full post as published by Instapundit.com on July 04, 2009 (boomark / email).