Contributing Factors to a Mortgage CrisisPosted: January 22, 2008
As I sit in the sidelines of the Bay Area Real Estate market, beleaguered, exhausted and frustrated by the fact that even when the market turns to shit, Arin and I still can’t seem to afford a house, I watch with great interest (no pun intended) to the news about the nation’s growing mortgage crisis.
What strikes me though about the coverage is how singularly focused it is upon the financial institutions behind the crisis. Little attention is paid to other possible contributing factors – such as an environment in which buyers are rushed to buy, in which buyers are compelled to make the most significant and largest purchasing decision of their entire life in less time than I typically spend deliberating about whether I will buy the marble bread or the banana nut bread at Peet’s every morning.
Of course I can’t speak for the rest of the country, but I can speak with some degree of authority for the Bay Area where I live, and where we have been engaged in the process of looking for a house for over three years now.
The Bay Area market and the [rate of foreclosures](http://www.nbc11.com/news/13757139/detail.html) it has seen could be an anomaly, or it could be an indicator of a larger problem.
The scariest thing about the process of buying a house here is not the financing — at least for Arin and I. What we have the hardest time with is the amount of time we are given to make our decision to buy. I can’t tell you how many times Arin and I had this conversation with an agent on a Sunday afternoon open house…
**Byrne (to Arin)**: “I think I could like this place.”
**Arin**: “It pushes our budget a little bit, and it is far from perfect. But you are right, it is nice.”
**Byrne** (to the Realtor): “Cute house. So, when are you hearing offers?”
**Realtor**: The day after tomorrow at 1pm.
For every house we have looked at, Arin and I would be required to take out the largest loan of our lives. We stare at spreadsheets for hours trying to project how on earth we will make it work, and the resulting pressure we feel to reduce our monthly mortgage payment is immense. Plus, the pressure we feel to raise our offer price is even greater — because after three years, you just get tired of getting beaten out by higher offers. You just want your damn house already.
Finally, combine those pressures with the fact that Arin and I have less then 48 hours on average to put together an offer, and you see how so many people in the Bay Area found themselves in a load they could not sustain.
Now this is the situation that Arin and I face every single time we walk into a house we like. **Every. Single. Time.**
So if anyone wants to try to rationalize how the Bay Area could be hit so hard by this crisis, don’t just look at the banks, look at a market climate that forces buyers into making really, really bad decisions.