Savannah Real Estate -- The Gambling Game

It appears as if the hoopla over subprime lending has settled down and the world didn’t end. What did it all mean?

Some lenders suffered severely. They made risky loans and the gamble didn’t pay off. Some borrowers suffered severely, they accepted risky loans and the gamble didn’t pay off. Everybody else? Well, they did alright – not much difference in lending and borrowing, except the slowing effect of sensational stories of doom and gloom proffered by the media.

What will most likely be the outcome is that lenders will quit gambling for awhile and borrowers will not be allowed to gamble.

It’s actually a good time to get a loan. If you have good credit, lenders are offering great loan products. The whole subprime debacle created a lot of fear, but when looked at in perspective it was the reasonable outcome of lenders accepting risk they shouldn’t have accepted. Borrowers took the money and many only had a vague idea of possible consequences. Hopefully everyone has learned valuable lessons.

What everyone else may possibly learn is that the modern media loves to sensationalize and awfulize (made up word), and that all stories should be scrutinized with objectivity and reason. Many buyers were, at first, unsure of what it all meant, they just knew it was bad – the media told us it was worse than bad, it was awful and spelled the end of the real estate market for years to come, would create widespread foreclosures, bankruptcy and God knows what else.

There have been foreclosures and there have been bankruptcies, but for the great majority of home-owners the most damaging effect has been psychological. Every day I hear people talk about how bad real estate has been. Yet, we know now that many areas have been relatively unaffected by the real estate slow down, and to the extent it has been affected, people’s attitudes toward real estate seem to be the main cause, not anything objectively wrong with the market. I feel sorry for those unaware that got caught in the gambling game and lost, but some knew better – they willingly gambled.

It will all shake out, though, and confidence will return, and the media will go to other stories to sensationalize and awfulize. I suspect we may be nearing the period of our development as informed citizens that the media will not be able to boost their ratings by manipulating our emotions - we see through it better now than before, and we will one day see completely through it as more people become informed through the many different avenues of information gathering and as more people become independent thinkers.

Hopefully one day the media will be forced by public demand to give us information that is objective and put into context. Hopefully.