Housing has become a national obsession. As a kid you were told not to talk politics at the dinner table or ask a person how much money they make. Yet you still had that curiosity. Today there is no need to ask because you can go to Zillow and find out how much they paid for their 2,000 square foot 4 bedroom home. So they say they have a pool eh? We can go on Google Maps and zoom into their backyard via satellite imagery to verify this claim. “So it was an above ground pool Bob was talking about!” And if you turn on the tube, you find the following television shows:

Extreme Home Make Over

Flip That House

Property Ladder

Sell That House

National Open House

Secrets that Sell

Designed to Sell

Bought and Sold

Million Dollar Listing

These shows appear on Bravo, A&E, HGTV, and your regular network stations. The point is, we are incredibly saturated with media marketing real estate. And do you notice a key phrase and underlying message in many of the shows above? Sell your house! Buy a home! If we are to combine a hybrid of the messages above we get something like “extreme flipping that will design to sell your house for a million dollar listing!” I think I’m on to something here. No longer is housing a place to live and raise a family in modesty, but housing is now an investment to propel you into the next dimension of uber-wealth. In reality, the amount of traffic online regarding real estate is unbelievable therefore indicating a wide demand for housing information. Not only that, here in California we have, according to the Department of Real Estate, 534,266 licensed brokers and salespeople. With 12,200,082 housing units in California that gives us one agent or broker for each 22 homes. Maybe we have an agent and broker bubble?

Either way, housing is becoming a massively important part of our culture and economy. Looking at recent employment data, for the past seven years real estate related employment has been attributed to impact 29% of all added jobs. And consumption is so important, accounting for 70 percent of our GDP, without housing we might as well forget the $5 trillion in pseudo bubble housing wealth and we’d be in a recession as we speak. But looking at the psychology of housing, we begin to see in the theatre of life many characters emerge. Since we have the tools to literally piece together every facet of a neighborhood and play amateur James Bond, we can find tons of information regarding our environment. So let us look at the housing personalities emerging in this housing bubble masterpiece performance.

The Five Housing Personalities

1. The Perma Bull Housing Sales Person

This person has never seen a house he wouldn’t sell (or buy). It all depends on the weather and the global positioning of the Earth. These folks have tattooed on their right bicep, “10% appreciation 4 life!” and show it off with glee. Folks that fall into this category are people like David Lereah, former chief economist of the NAR. His ability to spin would put the Harlem Globe Trotters to shame. He reminds us of Iraqi Information Minister Muhammed Saeed al-Sahaf. “We have them surrounded in their tanks” as US tanks rolled into Baghdad. You got to hand it to these folks, they have the ability to say absurd things in the light of mounting disaster. Either way, this personality will always see real estate as the absolute best investment ever. Even if the land is over Chernobyl they’ll tell you that spent uranium is good for brain development or that soon, you’ll be able to flip the property as a national treasure.

God forbid you give these people any facts or historical background. If you do, be prepared for a cadre of verbal assaults. They’ll call you a tinfoil hat wearing bitter renter. Or they will claim that the statistics you pulled out are fraudulent like the Nigerian documents CBS received. They’ll claim that the only truth is that of their all mighty association. Anything diverging from these talking points is tantamount to treason. They offer you a guarantee of appreciation. They’ll use the typical 7 to 10 percent annual appreciate rate; it all depends on what the central pundit hub is dishing out. A formidable foe no doubt.

2. The Perma Bear Housing Naysayer

The antithesis to the housing perma bull sales person. These folks are masters of dark and dreary statistics. For every argument a perma bull has, they have an equally convincing argument that claims otherwise. They are ready to do battle from experience either from losing money in certain deals (normally initiated by perma bull rhetoric) and suddenly are sworn warriors to the cause of outing the perma bulls. “Housing appreciation is 10 percent year over year” the housing bulls will say. Oh really? “What about the fact that 100 years of data show housing trending at a slow pace only keeping up with inflation?” Touché.

Their argument is valid and has merit in economic reality. However, in a bubble world they are throwing pebbles into the ocean. They will argue that inflation is cooked by government agencies trying to hide the real cost of living and seeing it as an invisible tax on the people. They will also claim that incomes do not support current market housing rates. Since 70 percent of the US population owns a home, there are less housing perma bears out there simply because of the law of self preservation and self interest. Either way, an equal challenger to the perma bull.

3. Apocalypse Now

A fiery asteroid will hit Earth and burn us to a crisp and then we will see 110 percent price decreases. After the 10 million people that survive the impact, you’ll see amazing deals hitting the market. These folks have a strong case of schadenfreude, that is taking pleasure in others misfortune. Normally many are angry and will throw it in your face that your 10 percent appreciation won’t matter after we collide with intergalactic space rocks. It’s an interesting personality to observe. They usually want to see housing explode and wouldn’t mind seeing a 2^nd depression shake up the world. The psychology behind this is rather fascinating. Whether they have the “moth going to light” syndrome I do not know, but one fact is certain and they want destruction and they are geared up for it.

These folks see housing overpriced by 90 percent. Forget using any income to rent to price ratios, housing will go down to Chinatown no matter what. 10 percent annual appreciation? Not in this world. Some of these folks have all their cash buried in the back yard. Great source for screenwriting a Hollywood script.

4. The Housing is in a Bubble? Person

These folks are your paycheck to paycheck people. They are the folks that signed for a $400,000 loan and forgot to ask if they just got a 30 year fixed or interest only adjustable mortgage. Oh well, unfortunately they’ll get the wake up call on a future mortgage payment in 1 to 2 years. These people really don’t care about a housing bubble. They were at home, watching one of the above mentioned housing shows and somehow subliminally, they learned that 10 percent appreciation always happens. So when Joe the agent showed them how to get into a 3/2 home for $500,000 on an exotic loan, they figured “what the heck!” This personality is a mixture of not really having time or initiative to care about the basic economics of the housing market. They are like a reed in the wind. They are more concerned about making the car, gas, electric, health, food, and other basic bills of life to dig into economic theory.

These folks are usually people who will have $3,000 in a savings account earning 2 percent while carrying a balance of $3,000 on a credit card at 29 percent simultaneously. Many of these folks will be burned once rates resets or they need to sell their home for various reasons.

5. The Hybrid Housing/Bubble Head

This is where the large majority of the population is. They see the value of owning a home. They realize that rent is really not a viable option for the entirety of life but they also understand that a home can be overpriced. It is a challenge for these folks because to a certain extent, they believe in the perma bull argument that housing is a great investment. Yet they also have the gut feeling of many perma bears that housing, after crunching the numbers, is overpriced. They normally don’t think that the world will end but realize prices will come down and in certain areas, significantly. These people normally understand some basics of finance; the major point they get is spend less than you earn. They also try to live within their means, have an emergency savings account, and want to have a safe neighborhood with good schools for their family. Many times, they fight the urge to move to a questionable neighborhood because family safety is more important than homeownership.

Conclusion

Most people interested in housing fall within a few of these personality categories. Imagine that all these personalities have gradients attached to them; some people are on the extreme ends of the gradients but the majority falls within the middle. They exhibit hybrid views on the housing market. What is your housing personality?

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