Laissez les mal temps roullez!

Several years back as the housing market was just starting to take off and the median price for homes here in San Diego was rumbling past $300,000 (300 grand!), two of our office mates were concerned and perplexed that “no one would be able to afford a home at those prices”. We took pains to inform them that someone, in fact, many people must be able to afford them or the prices would not continue to rise as they were.

It turns out though, our colleagues were, in a sense, correct – it’s just that they didn’t know in what manner they were correct or why they were correct in their assessment.

At the time, some 7 years ago, we were not yet hip to the “creative financing” and sub-prime lending practices that were being effected to get a feverish public (“home rushers”?) into their new homes so we mistakenly equated “purchased” with “afford”.

Recent data now shows that the San Diego median home price has fallen under $400,000 for the first time since November of ’03. Story here.

And this is just one of the many things that bothers us about the proposed Congressional bailout plans…. Did any of you out there who own a home honestly think those prices of some 2 years ago were going to keep going up or at least stay steady? Did you? We don’t think any sensible homeowner started making early retirement plans after their home’s value doubled, tripled or even quadrupled in the span of 5 years. We sure as heck didn’t.

And now Congress is trying to paper over what can be accurately described as a correction (because, again… no sensible person expected the good times to keep rolling). And we have to laugh at this notion of a “crisis”. A crisis? The current median price is still just under 2 times what it was back in ’99 when we purchased our crib. Some crisis.

One of the arguments we’ve heard by the bailout proponents is that it will get empty houses occupied quicker because empty houses are bad for morale, we suppose. Fair enough but guess what? We’ve lived next door to an empty house for over a year now (it was just purchased this week). Didn’t like it, but we kept the weeds down in the front lawn, made a couple of responded-to emails to the property management firm as to the status of the property and made nearly daily checks around the property to prevent any unsavory activity. We dealt with it.

The house was originally listed at $630,000 and ultimately sold for $360,000. The realtor had to “correct” downward to the more sensible market value. We can only imagine that Congressional meddling to falsely prop-up the price of this house would’ve only invited more sub-prime shenanigans… the same that ultimately did in the previous owners.

Dear Congress, Let it go…. just leave this one alone and it will all sort itself out.