Thursday, October 6, 2016

Housing: Part 181 - Predatory Lending in the bubble

Here are a couple of old graphs from the Survey of Consumer Finances that I don't think I posted before.

First is homeownership by education.

Second is homeownership by occupation.

Remember all those stories in the papers back during the bubble about all those doctors and lawyers and accountants being duped into buying homes?  Remember all those poor souls who were tricked into mortgages that anybody could tell you were too complicated for someone with a Bachelor's Degree to understand?

Basically all the new homeownership went to professionals and owners with a college degree.

Homeownership has declined in the bust in every category.  But, really, it's such a small price to pay in order to teach those predatory lenders that you don't go around cashing checks on the backs of college graduates and doctors who can't properly manage their own affairs.

Those high school drop outs and service employees will be fine.  They'll bounce back.  They are powerful enough in this rigged system to come out on top in the end.  They kept themselves out of that nasty housing bubble, didn't they?  Let's just hope those college graduates don't start getting crazy again.  We'll have to do some macroprudence to keep them where they belong.

Here's another good one.
Income quintiles


  1. Im so hopelessly behind on your housing series. I can't wait for the book.

  2. Another thoughtful post.

    I am a free-market type, in general. But vulgar Marxist analysis is surprisingly insightful, even if Marxist medicine is poison.

    Isn't is strange how one policy after another in housing---home mortgage interest tax deduction, property zoning and who gets credit---seems to work to the advantage of the upper classes?

    To balance artificially tight housing markets, we need borders open to tens of millions of illegal job seekers.

    And people wonder why Trump exists.

    The GOP and Donks are incredibly lucky Trump proves himself a boob, repeatedly and at every chance. If Trump had matured or evolved, he would win in a walkover, and against both the GOP and Donk establishments.

    I won't even get into the criminalization of truck- and push-cart vending.

  3. Unfortunately, investors are only buying pristine loans as MBSs these days. That alone keeps others out, as banks have to hold the loans that are more risky.

    I thought that getting a loan that would adjust, back in the day, was risky. Had I known that I should have qualified for the most expensive neighborhood and not mailed in the keys, that I could have lived in the house payment free for 5 years, I would have done it.

    The wealthy were protected, Kevin, from foreclosure as the banks did not want the best neighborhoods to crater in value. That, I think, should be taken into consideration.