U.S. Housing Shakes the Left Hand of Darkness — Lending in a Vacuum Feeds White Hot Market

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The Greek language is a testament to nuance. In crafting this week’s prelude, the word humility was the only one that came to mind. But for the original semanticians, that one word was too complex for a singular reference. There was Ταπεινότητα, tapeinótita, meaning low-lying and Μετριοφροσύνη, metriofrosýni, denoting modesty. The distinction commands respect. Tapeinótita is featured no fewer than 30 times in the New Testament. The Book of James conveys that “God is opposed to the proud, but gives grace to the humble.” No truer words. Aside from the example of Jesus Christ himself, no greater example ever walked the earth but Mahatma Gandhi. In his words, “It is unwise to be too sure of one’s own wisdom. It is healthy to be reminded that the strongest might weaken and the wisest might err.”

Being reminded of our intellectual fallibility brings to mind Metriofrosýni rather than what we instinctively know to be humility. Modesty is the capacity to accept criticism, accept one’s own limitations and shun the siren song of ego. When American author Ursula K. Le Guin’s The Left Hand of Darkness exploded onto the literary scene in 1969, science fiction books were the purview of white men – written by them, for them and about them. The story richly told from within a purely conceived interstellar world centers on two individuals struggling to understand one another mired in cultural barriers and sexual stereotypes. The catch is they are limited to expressing themselves once a month. More than any other one line of inspiration I’ve read preparing to craft this week’s dispatch is straight from Le Guin’s masterpiece: “To learn which questions are unanswerable, and not to answer them: this skill is most needful in times of stress and darkness.”

Comprehending this wisdom and succumbing to it are two different things, especially as it pertains to housing in America. I broke my teeth on residential real estate. The much despised and controversial predictions I made in 2005 and 2006 placed me on a path to serve at the Federal Reserve. That experience, in turn, put me where I am today — at a keyboard, with unanswerable questions, about a subject with which I am more familiar than any other in the sphere of economics and finance. I am thus humbly modest as I set out to only answer what I can about housing.

In endeavoring to provide what guidance is feasible at this juncture, I will do my best to show as much as possible. The data blessedly speak for themselves. What I won’t do is regurgitate headlines. Housing is white hot. New home sales hit a 14-year high in July. Home builder confidence is at a record high. Existing home sales rose by the most in a single month to the highest since 2006. Applications to purchase a home are up 30% over last year. Median home prices have breached the $300,000 mark for the first time in history. Care of the Fed, mortgage rates are at record lows.


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