Last Year we spent a year in fear of the next big collapse, this year not much has changed.

I remember a couple of years ago when we were all fat on cheap money which allowed us to buy overpriced houses and tons of Chinese made goods the world felt right. It wasn’t like we didn’t know we were sitting on a big bubble, I for one did. But the bubble was so big that one person couldn’t do all that much about it. Take the housing situation, I bought an apartment during the bubble period knowing that we were paying a high price and although the real-estate agents tried to convince us that the bubble wouldn’t burst because the economy wouldn’t allow it to. I know they were full of garbage but also knew that dealing with a real-estate agent is only slightly more tolerable than dealing with a used car salesman. So we all bought expensive homes with borrowed money in an economic climate which was far from stable but since everybody else was doing it became a title-wave which obviously exploded.

What bothered me with all of this is that people take the entire housing crisis and lump it all together when speaking about consumers. The housing crisis is really three parts: the guy who is underwater on his house because pricing fell through the floor, the guy who was never able to make payment anyway who bought something way over his head and the guy who borrowed so much money against his house expecting 20% increases.

When I look in my neighborhood and see people who may be underwater on their house, I feel for them because that could have been us if we had waited another year or so to buy our place. Our neighborhood is far from deteriorated so it’s not a huge issue but there are certainly apartments which are worth less on today’s market than they were bought for. There is something to this title-wave action which I think was unavoidable if you were looking for a home somewhere between 2003 and 2006. You couldn’t negotiate the prices below what the market was asking for so unless you were savvy enough to have avoided the housing bubble all together you were in trouble any way you cut it.

The other two scenarios I have less sympathy for the guy who make $45,000 and bought a $750,000 home regardless of what the surrounding market was.. I also don’t have any sympathy for the guy who took his home, refinanced his mortgage and took $40,000 to go on a vacation expecting the market to only grow. They hoped the market would go up but knew that if it didn’t they could still make the payments

The first scenario feels like a guy caught in an unavoidable title-wave while the second two are situations where people were in the speculation business. They gambled on the market only going up and had no fall-back plan.