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A friend in the mortgage business tells me he gets calls every day from people who want their house repossessed -- people want to walk away from those monster-bellums in which they have zero equity, thanks to the interest only and zero down loans the industry pushed in an effort to blow up the housing balloon for all it's worth. "Hell, I tell 'em to sit tight, stay there, because we are six months behind in repos and besides, we may be able to sell them on a negative amortization loan. Let 'em pay what they can and we refi the difference. In other words, their debt just gets bigger as they pay, but they stay in their houses and their kids stay in the same schools."
Now that's a pretty scary economic picture to anyone with the sense god gave a soggy animal cracker. Right? Not to most sellers I know. Despite that this town has more for sale signs popping up like weeds, everyone is still going to make money on their home when they sell it. Including my own household. Here's a conversation slice from around my own kitchen table: "We paid $120,000 for this house eight years ago. I don't think $395,000 is unreasonable. The people who make enough to buy this house are all over toward Washington, DC and they want to live out here." Or "The Fed did not raise interest rates last week, so more people will be buying now." And "If we don't sell it, we can remodel instead." And I think to myself, "If Sisyphus had a wife, she would be looking for a bigger rock."
It's no wonder we can sustain our magical thinking until the very last minute of undeniable truth. We get lots of support in our delusion. Commuting to work I recently heard NPR's marketplace reporter tell listeners, "It's not necessarily a collapse, it's more of an impasse, a stalemate. Neither sellers nor buyers are budging from their original positions. Things will eventually loosen up." Sometimes a car radio can be an instrument of torture for the driver. So, if you saw a red faced old man pounding the steering wheel and cussing, it was probably me.
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