There are a lot of reasons the housing market went into a huge slump. As with any cataclysmic downturn, there are several forces that worked in concert to create the worst downturn in anyone's memory. But if you had to put your finger on just one thing, you could jab into the time-tested idea of greed.
Buyers wanted more house than they could afford. Sellers wanted buyer wars and quick sales. Homeowners wanted to extract equity to pay off debt or build larger homes. Speculators wanted a run-up in price. Builders, land developers, trade contractors and others wanted to take increased profits and higher returns on investment. Lenders wanted to sell more loans. Mortgage markets wanted to play in the high-stakes, high-yield game of risky mortgages.
At every step of the way, it was as if people were squinting tight their eyes and looking at the business decision they had to make with a distorted view, hoping that it would all work out. That hope rested on a need for home prices to continue to climb. It was — as we all now know, and people did know then but chose not believe it — that the hope was false hope. Home prices fell. It was inevitable.
At every step, we had a bit of greed driving us, and it is dismaying to see the same force come back into the market. On morning news shows and in newspaper real-estate sections, you can find experts explaining how to buy foreclosed properties and the financial benefits (as well as danger) of speculating on such properties.
Apparently, we didn't learn anything.
This is the housing market, but speculators are trying to trying to take the same elevator ride they did with dot.coms or commodities. The speculators get on the elevator at a price they think is low, and they get off when they think it's topped out. They don't really care about the elevator at all, other than it's a vehicle for them to maximize their investment. Do we really want housing dealt with in the same way we do commodities?
The effect is we end up commodifying something that has an essential value in our lives, a value that extends well beyond financial well-being to psychic and physical well-being.
So, what do we do? The only solution is to avoid our own greed and not take profits. Maintain an even control of our own pricing, not try to do our own profit taking. Take greed out of the equation and remember we build houses that will last for years, not the length of an elevator ride.