The Agony and the Ecstacy

Mi Casa Su Casa

In Spanish "Mi casa su casa" is an expression of hospitality that literally translates as "My house is your house." Figuratively it means "Make yourself at home." But more and more people who called the house they live in their home are losing that home to the evil mortgage bankers who loaned them too much money at too attractive terms. Of course, those evil mortgage bankers weren't so evil when the slippery buyers puffed up their financial resumes and begged for a marginal loan.

Houses appreciated like a balloon getting bigger and bigger until like the weasel of children's song, it went pop. Each week those adjustable rates are, well, adjusting and folks who got the easy money are stunned to discover that the balloon that went up as though it were filled with helium is now a balloon payment. Las Vegas is a venue in which many of those loans were written and admittedly some went to hapless young folks on a limited budget whose dream of home ownership is becoming a nightmare. But many are speculators who flipped more houses than IHOP flipped pancakes during the property gold rush. I personally know of people from California and Illinois, and even some from Las Vegas who bought homes as soon as the subdivision builder put them on sale, then resold them, still unfinished for a profit in excess of $ 100,000. The new owners sometimes flipped them again for another $ 100,000 or so profit.

The carpetbagging became so outlandish that some builders put restrictions on who could buy their homes and how many homes could be purchased. I know a person who wanted to buy a second home nearer his place of work but was denied because he already owned a home in Las Vegas. It is almost impossible to know how many flippers were caught up in the scam which had all the earmarks of a Ponzi scheme except it was legal, but it is hard to feel sorry for those who made hundreds of thousands flipping their coins and are now crying the bankloan blues.

This is not the first time a housing glut in Las Vegas occurred. I bought my first Las Vegas house in 1969 with a $100 down payment. It was one of the many on the market back then that had been overbuilt. And now, nearly 40 years later another housing glut exists. And just in the early 1970s after the glut subsided, there will be a housing shortage. A report by the Nevada Homebuilders Association predicts the shortage to begin in 2009 - in less than two years. A little blogging music maestro... how about "Don't cry for me Argentina. The housing slump is temporary...."

Dr. Forgot