****************You don’t truly understand the psychology behind the housing bubble until you see how dopey some of the participants are and, more surprisingly, how willing they are to share their stories with millions of people.
It’s one thing to lose your shirt, it’s another to tell your story on national TV.
Admittedly, Casey Serin of the now defunct iamfacingforeclosure.com has set the bar quite high, but Bruce Helmprobst turned in a stellar performance on last night’s ABC Evening News, providing another sad example of what happens when our “fifteen minutes of fame” culture in the YouTube era meets up with the latest financial bubble.
Charles Gibson: One reason for the volatility in the market these days are the concerns about the mortgage market. Home foreclosure notices were filed against 573,000 homes in the first half of the year, an increase of 58 percent over last year – devastating for some, opportunity for others. ABC’s Miguel Marquez takes a closer look.
Miquel Marquez: In a sign of how low the housing market here has sunk, Joyce Essex used to make most of her money selling homes. Now, 90 percent of her business comes from handling foreclosures.
Joyce Essex (Realtor, Coldwell Banker): Basically, up to this point, the banks have been able to sell the properties for real retail prices, but just recently, they’re starting to get so many properties that they have to get them off their books.The text version above, with just a few “uhs” included fails to capture the mood of young Mr. Helmprobst – if anyone finds a YouTube version of this, let me know and it will be posted here without delay.
Marquez: All of last year, Essex handled 16 foreclosures, now she handles one a day.
Professor Frank Alexander (Emory University): The foreclosures are occurring across all neighborhoods and across all income brackets.
Marquez: In the first six months of this year, foreclosures have skyrocketed. In California, one in 124 homes have been in foreclosure, in Ohio it’s one in 112 homes. In Nevada, the hardest hit state, one in 69 homes this year have been in foreclosure.
Rick Sharga (Marketing VP, RealtyTrac): A big part of the issue we’re seeing right now is the percentage of people who tried to buy real estate as investments. A lot of these people took out high risk loans on what would have been risky purchases in the first place and when the market slowed down, it left them holding the bag.
Marquez: In the once red-hot housing market of Las Vegas, investors like Bruce Helmprobst hoped to cash in. He purchased seven homes – three are now in foreclosure, others are on the brink. What once appeared to be can’t-miss deals are now dragging him toward bankruptcy.
Bruce Helmprobst (Real estate investor/bag holder): This has just really drained me emotionally and, uh, I have a lot of bills and a lot of mortgages that I can’t pay and, uh, banks are calling me every day.
Marquez: Banks are calling thousands of homeowners every day – the foreclosure crisis that most economists expect will continue for at least the next year.
The wavering, sometimes cracking, voice to go along with a general “deer in the headlights” expression and defeatist tone are important in many ways – not just for the schadenfreude, but as a clear indication that the bag holder still doesn’t really understand what has happened to him.
As mentioned here before on a number of occasions, if the U.S. economy is going to continue to be just one financial bubble after another, policymakers in this country should really consider making one of the many books about financial bubbles mandatory reading in high school so that, at the very least, future Mr. Helmprobsts might not appear so clueless when they are interviewed on national television.
They could start with just the first hundred pages of “Extraordinary Popular Delusions and the Madness of Crowds” written back in 1841 – John Law and the Mississippi Scheme, the South Sea Bubble, and TulipMania.
Financial bubbles are nothing new – they just happen a lot more frequently now.
Lost in all the attention given to young Bruce is the growing realization by the mainstream news media that the problems in housing are getting worse, not better – something that, in itself, will make the problem worse still.
by: Tim Iacono