Megan McCardle is doing a bit of whining over at the Atlantic about her search for a house, which–trust me, I get it, as I’m looking for a house in West Adams, which is no picnic. She writes:

The only way to break a lease is to be a single-family owner who wants to take occupancy. The bank has to let the tenant’s lease run before they are evicted, as well as give them ninety days notice of the intent to vacate the property. Given the difficulties of selling a house that cannot be shown, a lot of banks are choosing to do just that. Others are putting it on the market and then finding that, surprise! they somehow never can schedule a showing. Yet the banks are understandably unwilling to drag the tenants into court, which is very time consuming, and a huge burden on already overwhelmed administration.

link: Why Are There No Houses for Sale in DC? – Business – The Atlantic

This tone is one of the reasons I refer to “whining.” Yeah, I face the same problem. Of the few places that are for sale in West Adams, many are tied up in leases. But I actually think that protecting tenants from the financial irresponsibilities of landlords is a good thing, and while it’s not convenient, it does keep people from losing their housing, and even though you can’t tell it from US housing policy very often, one of the goals of housing policy should be to help people be sheltered rather than to help them be homeowners.

And as one of those renters who didn’t exercise my rights to refuse to have the place shown, let me tell you: we regretted our cooperation with our very nice and generally wonderful landlord as her entitled, lying scumbag of a realtor wanted in the place night and day and threw a tantrum when I finally said no because he “had buyers from out of town who couldn’t reschedule” so we gave in at incredible inconvenience to us. Turns out: the buyer from out of town was another realtor, from the Valley. Some realtors are just unethical, period, and the scummier they are, the more likely they are to treat renters like something they scraped off the bottom of their shoes.

Unlike my realtor who is simply awesome in every possible dimension of awesome: Bill Cooper with the Loft Experts.

McCardle’s other point I actually think, is a bigger problem for me:

The broader nationwide problem is that banks have a huge backlog of these bad loans, which means first, that they simply don’t have the adminstrative capacity to put them all on the market at once, and second, that at least in the case of the larger lenders, they are trying to dribble them out over time and avoid crushing the market.

link: Why Are There No Houses for Sale in DC? – Business – The Atlantic

For every real sale in West Adams I can find on Zillow or MLS, there are about 20 foreclosures, I’d say. And you can’t find anything about them. I’m not even talking about pre-foreclosures or places where you have to protect the identity of owner-occupiers still here. I’m talking places in full foreclosure, where banks just want you to hand them cash based on no information, not even a walk-through, and cash equal to the redonkulous mortgage they floated from 2004 to 2007.

So things are supposedly so great for new home buyers now, but in my experience, they really are not, and the same is true for McCardle as well it seems.

I’m trying to figure the economics of the shadow inventory for banks. I need to learn more about this. I’m wondering if banks are really holding on to the inventory to avoid crashing the market. It seems like there would be enough reason for banks to want to let their inventory go–rather than be the bank who winds up getting caught for “too long.” But there are also problems with being the first hold-out to let go. But it’s not like banks can expect to hold onto these houses for as long as it suits them without putting maintenance money into them: that’s a fast way to holding an asset that is worth even less than its compressed market value. I need to read more and think more to understand this problem. My suspicion is that banks are just overwhelmed by the management problem and haven’t figured out how to move the properties. In the case of West Adams, it’s a hot zone for foreclosures, particularly south of Exposition, and so holding on strategically would mean a pretty long hold-out horizon.

Anyway, this should give some backseat advice-givers pause about how “now is a good time to buy.”

HT to Andrew Gellman

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Now that the housing bubble (or whatever it was) has gone pear-shaped, we tend to see the whole episode discussed in highly clinical, economic terms. For those of us who had been trying to cope with the costs of housing during that time period, it was hardly clinical, and the people holding short sticks now were hardly then the sad little victims of the big bad banks then that they are generally portrayed to be now. Yes, I do think some people are victims, but the truth is, for every victim, I encountered back then swaggering realtors, mortgage lenders, and home owners who believed they were the smartest people in the world for being the market while was the dumbest and most pathetic person in the world for not being in the market.

Meghan Daum’s new book is called Life Would Be Perfect If I Lived In That House, and I have to admit I stayed up all night last Monday reading it. She’s an absolutely marvelous prose stylist, wonderfully funny, and remarkably insightful about how the external trappings of the house and decorating became, for Americans during our second Jazz Age, a way to demonstrate to others and ourselves our personal character and distinctiveness. Bourdieu, my favorite social theorist, will probably get to use this episode as a nice double entendre wordplay for his concept of habitus.

The brilliant writing of this next passage from Daum’s does more to capture the reality than all the sanitized economic writing about the “Bubble that wasn’t a bubble” I’ve consumed in months:

It was, by now, 2004. We were not at the apogee of the market, but we were getting there. The way I’ve always imagined it is this: if the real estate bubble were a distended piece of chewing gum in the mouth of a teenage girl, it would have been about the size of a lemon at that point–formidable but not yet out of control. By early 2005 the bubble would have covered her nose and eyes, and by the end of that year, it would been as big as her head. By 2007 it would have deflated slightly, and by 2008 it would have popped and been all over her face. By 2009 she’d have choked and died on the gum, but let’s not go there now.

She continues:

Instead, let’s remember 2004. Money was everywhere: talk of it, displays of it, envy of those who had it, and pity for those who didn’t. In the spring of 2004, you could find a thirty-year fixed interest rate of 5 percent. Adjustable-rate loans were, of course, practically falling off trucks–not just shiny, new expensive trucks but old, beat-up trucks, garbage trucks, even. People were paying $600,000 or $700,000 for properties that, four years earlier, would have been worth $200,000. people were taking out low-interest loans for $700,000, buying houses for $550,000, and using the difference to buy Range Rovers and vacations in Anguilla.

I remember thinking about this when I came back to Los Angeles from Virginia and I was staying with dear friends. I had made an above-average steak dinner, and we sat around that night and talked of three things: food, as these friends are foodies, the shootings Virginia Tech which still exert a profound effect on me, and real estate. And real estate and more real estate. I wondered then if I hadn’t simply been overloaded with real estate talk because I was looking for housing, but I don’t think so. It was everywhere, in the air, like the heady-sick sweet smell of jasmine past its prime.