After the Housing Crisis, the Stories
Two new real estate books, and the stories not yet toldThree years ago, I put a down payment on a new house, and put my current house house up for sale. Never once did I think my first house would fail to sell. Not once.Today, the mindset seems loony. Unimaginable. How could I not have anticipated it? While I blissfully spent my future profits in my head, and started buying furniture for my new sweet brick cottage, I began to read newspaper reports about a downturn in the housing market. But never underestimate the power of denial. I became one of many, stuck with a house I could not sell, two mortgages and a bucketload of stress.Two new books on the real estate meltdown let me know I was not alone in my magical thinking. In Busted, Edmund Andrews, a New York Times reporter, tells the story of how he bought more house than he could afford while reporting on the housing meltdown for the paper. He understood the ins and outs of the credit swap market before the rest of us knew the word "subprime." Still, he jumped into the fray, ruining his finances and personal life along the way. (The best commentaries on Andews's much-commented upon, problematic book come from Megan McCardle.)
I wish I had known Alyssa Katz back in 2006, because she has been investigating the real estate market since 2004, and her new book, Our Lot: How Real Estate Came To Own Us, introduces us to more magical thinkers: the middle-class couple who decide to spend their savings on swampland in Florida (I kid you not), the handyman who started buying and flipping and made out great until he could no longer flip. Today, he is stuck with several properties worth less every day.Me? I decided the market could get no worse after my house sat for a year. So I took it off the market and rented it for another two, becoming one of the world's least competent landlords (thank goodness nothing went wrong with the house), allowing rent to come in late, covering utilities myself, and always operating at a loss. (Turns out I'm in great company-Timothy Geithner can't sell his house, either, and has also turned to renting.)This spring, I put the house back on the market. When the agent told me what she thought I could get for it, I blanched. All I could hope for was to break even, after I paid off my mortgage, home equity line of credit, closing costs and the credit card I used for house expenses.And that is what I got. Or hopefully will. The deal closes next week, and my fingers are not yet uncrossed. I feel nothing but remorse. After all, I could have made the same move-lowered the price drastically-three years and thousands of dollars ago.
Katz and Andrews have people to blame for their real estate crises, and they do so-Katz through the hard work of intensive on-the-ground research and interviews with common folk, and Andrews through a personal tale of financial woe intercut with breezy, well-reported stories about CEOs. Andrews has it in for Greenspan. Katz blames predatory lenders, and the various administrations of the past twenty-five years who blithely encouraged every American to become a homeowner. Me? I think I should have known when to cut my losses. (Fast Company did a great infographic comparing these two books.) Which of us is most susceptible to magical thinking? Who should be the proper antagonist in our housing disaster narratives? With these books, we can begin to sort through the line-up.There are many real estate stories yet to be told-while reading Our Lot, I kept wondering why I had not read these stories already, why there has not been more feature reporting on the people caught in the crisis. We get foreclosure and house price figures every month, but not enough about the stories behind the numbers. Why? Have journalists been too absorbed by the election and foreign policy to find these stories? Too overwhelmed by increasing editorial demands and fears about losing their jobs (or, like Andrews and Katz, who fought a New York co-op battle while writing her book, too distracted by fears of losing their own houses)? Or are many reluctant to tell their stories, because, like me, they feel a teensy bit of shame?Katz's important book introduces us to people still reeling financially. We close Andrews's tale with him on the precipice of foreclosure and bankruptcy (also, we end his story convinced he should have known better, not only about housing but also about divorce and remarriage...). Still, we lack endings. We need to tell more stories about the beginnings and the middles of our housing sagas, to help us answer question lingering yet, the one stories prompt us to ask: What happens next?