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Let's see, do I recall a series of articles in 2004 and 2005 about how foolish it was to be sitting on your home equity when you could be cashing it out and investing it in, well, MORE real estate! Yes, I believe I do. I remember gagging at the audacity of the financial retards in the pieces I read in newspapers and online who clucked over the ignorance of the boobs (like me) who let their home equity lie un-leveraged. Fortunately, my wife and I knew this was a pile of horse dung and burned the newspaper.
Unfortunately, millions of homeowners once again proved a fundamental tenet of human behavior: people will always believe that the way things are today is the way they will always be. Booms go bust; that's why they're booms. Yet Joe Homeowner turned his Beige Castle in the burbs into a wallet again and again, cashing out for the 64" plasma, the new boobs for wifey, and that new deck with the turbo-charged gas grill.
Oh, but then the ARM loan came due...and home values quit elevating like LeBron James...and we owe WHAT? And our house is worth WHAT? Oh dear. Oh my dear me.
The media bought and sold the real estate/Wall Street love affair just as it bought and sold the "new economic rules" of the dotcom boom, when whoring publications like Wired talked about the "Long Boom" to come. Pigeon-brains, the only long boom is the inevitable crash of housing prices. The media sold, we suckers bought, and what's always true will again be true. The folks who don't panic and do something stupid now will come out fine. The stock market will right itself. Home values will stabilize. Not tomorrow, but next year, probably. Some folks who got burned will learn and make wiser decisions next time around. But the people who freak out will take a bath. And the world will keep turnin'. Amen.
