This is and area that is near and dear to my heart for a number of reasons.

First I’m a nationally syndicated home designer with plans in books and magazines. So when people are building I make lots of plan sales.

But up until a few years ago I still did very high-end custom homes. Because of this I have been courted by almost every big lender offering me crazy amounts of money and other stuff if I would persuade my clients to go with them and even more bonus if I would talk them into certain loans that made them more money.

I never did it since I felt that it was wrong to lead people into something I knew they could not afford.

I think that there are a number of mortgage brokers that do look out for the clients best interest but I know that it is hard to do when you are paid based on the loan type and amount you sell.

One of my clients owns a mortgage company and we have had this talk all to often.

He pushes the sales agents to make the best loan for the company not the buyer’s best interest. The agents even have a quota of certain loans to make or they are let go.

The agents know that their job is on the line if they don’t meet it. It is simply greed on his part.

A different example of greed is when I did custom home on Daniel Island, for a real estate agent and his wife who works for Software Company. The home was in the $1,500,000 range.

When I first meet clients I ask a lot of tough and personal questions to make sure that they can pay my fees and afford the home. It is a waste of my time to do design that the client can’t afford.

Most of the home that I have done in that range has been for people that don’t live in the same reality as most of us. It is most often a 2nd or 3rd home for them.

One of my questions is how much home do you think you can you afford

He told me he was wanted a home in $1,500,000 range but not to go over. I will never forget his words to me. “ I want people to know I have arrived and for people to want to be me.”

My next question was that is great but do you under stand that in this neighborhood that you still need to have the lifestyle to go along with this image.

He told me that he sold lots of home and that he did not see his income or his wife’s income going down and that he could get grow in to the payments if he had to until is was sold later

He seems to just not care.

His goal was to sell the home in 2 years for $2,500,000 and walk away with a clean $1,000,000 in cold hard cash.

I told him that I didn’t think that it would be worth that in only 2 years but that he was a real estate agent and I’m sure he knows the market better then I do.

I then tried to explain that when homes get in that price range of $2,500,000 that the buying pool is very small. Plus most people who are going to spend that kind of money want to have it custom built.

But what was sad about this whole thing was it was done totally out of greed. He just wanted to flip it and in two years.

Even very smart people are sucked in by the allure of easy money.

I had no idea that this was part of the problem. My mind is stuck on smaller loans...people refinancing so they can keep spending. Interesting.

Yeah, I used to be too until I realized there is a big difference in being a true conservative and being a Republican (at least over the past few years).

As far as thinking my post looked like something Pilosi would say... Well, I'll forgive you this time. I can certainly see why you would think this though (I saw something that grabbed my heart on the way home from the store yesterday, right before I read this thread).

I guess I need to hear more about this mortgage problem before laying down an opinion.

Ricky, want a real good shot in the arm to your right wing, conservative world view? Try and find a radio station in your area that carries "The Savage Nation" with talk show host, Michael Savage.

Charles, thanks for sharing that story about the rich flipper. I'm sure Las Vegas, Florida, and San Fransisco Real Estate has seen quite a few with the inflation in property values.

I was just messin' with ya Stephen, I know you really believe that a lot of people were screwed and I agree to a point, I'm sure there were some uneducated people that were duped. But even then, I'm 100% for personal responsibility and no bailouts.

Yea, I'm kinda a talk radio junky. But I stick to Dave Ramsey, Laura Ingram, Sean Hannity, and Neil Boortz.

Hi,
As far as bailing people out. I have drifted away from being a conservative . I just found it morally wrong to be for bailing big corporations out . So a bunch of rich old white guys can line their pockets . Then be against supporting the little guy when they have trouble .

The government is bailing these people out now . Because,they where used as fodder to keep the real estate boom going . The peopl up high new what was going on .

Now now .. don't mistake me for a socialist .. er i mean liberal ..or progressive ..

Ken

Does it threaten the national economy when marketers (in this case the mortgage and real estate market) are allowed to capitalize on consumers' stupidity and greed?

From what I understand it does. Too bad everybody was just too stupid and greedy to think about the long term. Including mortgage lenders and realtors. As individuals, unless they are planning on moving to Switzerland or Barbados, they are going to face the residual effect too. I am reading about a lot of recently unemployed real estate brokers.

The government pretty much has a hands-off policy on business---unless it starts to mess with our economic health.

Are Miami, Phoenix, LA, San Francisco more inflated than New York and Boston in real estate prices?

One bedroom craphouse condos (reformed tenements) sell for $600,000 and up here.

Rental has its own set of problems. You are basically wasting potential mortgage payments on an unsecure living arrangement. You are at the mercy of neighbors and a landlord and you are constrained when it comes to making home improvements.

I think there are some similarities between the "old" expensive real estate markets like New York, Boston and the new ones.

Of course you have a limited number of living spaces available within the downtown areas of these cities.

New York City and Boston really became expensive after the stock market started taking off in the early 1980's... there was a lot more disposable income available so housing was going to increase in price.

Sorta the same in San Fran except it was computers, the net and silicon valley that created tons of excess income-- income that had to be spent somewhere.

I had someone remark to me the other day that Miami's real estate market really took off when the drug lords needed a place to invest their money. LOL!

Phoenix and of course south Florida have become retirement havens (not that I find a month worth of 100 degree days in Phoenix or the high humidity in south Florida to be my cup of tea)-- again a lot of disposable income flowing into the market.

Suzanne,
Check out what a little over $600,000 will buy you in the North East Houston area (my neck of the woods)...

Not too bad.

Perhaps a whole bunch of Yankees will see this and move to Texas causing a rise in Real Estate prices.

Primo,
Texas is to hot for us Yankees. I live just south of Boston . At the moment i am stuck in my parents basement. When if i made what i made now in another part of th country I could afford to live on my own. Soon enough. When i get off my butt and start using what i have learned to make money. Relocating is a goal . Though at this point i would be more intersted in living outside the country.

The problem with the rapidly raising rents and housing costs . Is that it has Really beaten up the people on the lower side of the income ladder. In my own way i feel the speculator getting slaughtered and loosing everything . Deserve it. Screw them let them suffer. It's the people who where coach, coaxed, and conned into buying a home to live in . That i feel for . I don't even hav mercy for the people who have been refinancing to pay off their credit cards.

(do you sense a little anger in that paragraph )

The same people who got slaughtered in the doc com boom. Got slaughtered in the REal estate boom. They took their money out of the market in 2000 2001 and dumped it into real estate . They will be the same people who get slaughtered in mass at the end of the next boom . The next boom is most likely going to be alternative energy equipment. That only my guess though.

Ken