Candy in the morning does not a breakfast make…
Jackson stood at the side of the bed this morning with one thought on his mind. “Candy,” he uttered proudly and with a broad grin.
The way he said it, with a lengthened first syllable that sounded more like a nasally “Ken” followed by the shortest possible “dee” cracked me up. It’s a great way to wake up, laughing.
But more than the way he said it was that he said it at all. Witnessing the elemental construction of memory is nothing short of miraculous.
You see last night Nicole and I brought Jackson and Lucas to a kids’ play date hosted by my brokerage, @ properties chicago. And aside from the fun and frolicking along with pretzel and pizza nibbling that took place at the bubbles academy in Lincoln Park was a gift bag chock full of more sugar than makes sense for a small nation to consume in a week.
But clearly Jackson remembered the bag and the joy he had in consuming a few choice morsels before Nicole and I allowed him to spiral into a sugar coma. And with the start of a new day he wanted to bring the memory back to life.
Perhaps you might categorize Jackson’s memory as selective. That doesn’t seem a stretch from the truth. Nor is it a stretch from the truth that the overall Chicago real estate market might be categorized beneath the same “selective memory” umbrella.
Surely there are more than a few sellers whose vision has been clouded by selectively remembering a time not long ago when their homes gained value at a more prodigious clip. And so some of these folks optimistically set their pricing accordingly.
We also have more than a handful of buyers whose actions are steeped in selective memories of internet stories of nameless and faceless buyers somewhere buying in current time a million-dollar home at pennies on the dollar or who drove a hard bargain in buying a place from a desperate seller. Fueled by Larry King interviews of talking heads these buyers seem less interested in fair value of a Chicago home or condo than they are in getting a great deal.
And finally we have the financial industry with its particularly pungent way of exercising selective memory. This group includes lenders, Wall Street, mortgage brokers, and local appraisers.
This passel of those loved primarily by their mothers has exercised selective memory whereby they mouth platitudes of rectifying the errors that led to the mortgage meltdown (perpetuated by these same market know-it-alls) while plunging daggers into the back of any recovery of the housing market by creating an environment in which
a) those who want to buy homes are prevented because of obscure and changing application guidelines - 10 percent down becomes 15 or 20 percent a week before close or new construction projects must be 90% sold before a funder will even consider a loan application
b) appraisals stipulating comps be from within the last three months and a four block radius - and when there aren’t suitable comps due to the lack of transacting (because money hasn’t been available to qualified candidates who want to buy a home and because of a little checked box indicating that the property is in a DECLINING market), appraisals come back lower than the agreed upon price and threaten to blow up the transaction
c) sizable market speculators bet on the mortgage industry topto “crap out” in the same manner that the unliked fellah at the end of the table in Vegas makes his pariah-type bets for the die roller to do the same. It’s simply that the size of the kitty is much greater as this macabre speculation threatens to tip the country into an unforgivable spiral of historic proportions.
With respect to “c” the front page of Friday’s New York Times carried word that there was fear of Freddie Mac and Fannie Mae being placed into conservatorship because speculators were betting so intently that these government sponsored enterprises would devalue so profoundly as to no longer be able to function. Observers on the sidelines, including Senator Christopher Dodd, the head of the Senate banking committee, commented that “There is a sort of a panic going on and that’s not what ought to be. The facts don’t warrant that reaction, in my view.”
By the end of the day both GSE’s had recovered enough to chase away this unappealing prospect. But here’s the real deal - if Fannie Mae and Freddie Mac are buried beneath the sharp spades of these market jackels (who want to speculate personal gains on the losses of the country overall) we will witness a grinding to a halt of the housing industry.
What’s the solution? Short of storming the castle where Frankenstein lives with torches and pitchforks I think our national consciousness must be cognizant to the manner in which our economy is predicated on speculation, conjecture, guesses (some incorrect), and shortsightedness (at times).
Ah, shortsightedness. It’s reminiscent of selective memory.
At the end of the day my hope is that we are able to actualize stewardship of the market akin to good and effective parenting.
There is talk of establishing legislation to forestall a run on Miss Mae and Mr. Mac. Properly done this will make a great deal of sense. And thus, like parents who hug their baby in the morning and steer him away from the bag of candy to the gluten-free waffles, we will have done what is right.
At any rate, that’s all from Tom McCarey on this sultry Saturday amid the din of showing my listings in the Chicago real estate market. Please continue checking in here at The Real Estate Lounge Chicago for occasional updates.
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