Bubble market comeback? Time for Bidding War Reparations Fund?

JFK on Expectations

Commenting on Boston.com’s recent post, “Bubble market comeback,” @thirtysomething Thanks for asking the question, “As long as people can actually afford their purchases, who are we to question the price they choose to pay?”

In September 2012, Karl Case and Robert Shiller, co-founders of the Case-Shiller Housing Index, spoke at the New England Mortgage Bankers Convention about the psychological factors underlying the last housing bubble. Speaking about price appreciation, they said homebuyers are an optimistic group who are better off financially than others in the economy.

Couldn’t one argue that bidding wars REWARD the most optimistic and wealthiest homebuyers? Collectively over time, doesn’t that mean that their purchasing power and price expectations have the potential to distort housing values?

By reducing interest rates to record lows, the Fed has artificially juiced everyone’s purchasing power by 33% so now all of us think we’re rich and too many expect home prices to soar again. It’s not real, and it’s not sustainable.

So back to @thirtysomething’s question: If some people can overpay, why should others care?   Concern for the common good, for the Commonwealth and our own pocket books, demands that we care because when the house of cards comes down, we all —as taxpayers—pay. As critics of the last housing boom / bust cycle complained, our economic system privatizes GAINS and socializes LOSSES. Isn’t time we learn from those mistakes?

This idea was originally proposed in an April Fool’s Day post, but the idea has merit and addresses @thirysomething’s question:

“3. To prevent passing on the cost of another trillion dollar housing boom / bust cycle to the next generation of taxpayers, two thirds of any bids over asking price will be directed to CFDB’s Bidding War Reparations Fund.”

If you’d like a laugh, read the rest of the proposal, entitled “Slow Food Movement Inspires Real Estate Reforms.”  Better yet, join the Real Estate Consumer Alliance and ask your friends to do the same using this link:  http://bit.ly/JoinRECALL

Posted in Bidding wars, Bubble Hour, Buyer agent, Consumer protection, Defensive Homebuying, Housing bubble, Real Estate Bubble, RECALL: Real Estate Consumer Alliance

Leave a Reply

Your email address will not be published. Required fields are marked *


Recent Posts
Recent Comments
    HTML Snippets Powered By : XYZScripts.com