Ten and a half years ago, sorting through the day's mail, I would often marvel at the number of let-me-sell-your-home postcards from real estate agents. We were surely half-millionaires on paper, I remember thinking, because our nothing-special suburban house had, apparently and quite suddenly, nearly doubled in value.
"On paper" was the operative term.
I had known something wasn't quite right, but the glitter of found money was dazzling — just not dazzling enough, fortunately, for me to suggest that we do something about it. And so we sat and watched.
Millions of other dazzled Americans took the leap, though.
Then, 10 years ago this weekend, it all collapsed. Lehman Brothers filed for Chapter 11 protection, an event generally acknowledged as the start of the Great Recession. The abyss began swallowing homes — and lives.
The mighty fell. The middling fell. The struggling fell. Some foresaw the calamity and profited. And some, like me, survived simply through inaction and by luck. But we didn't completely escape, because no American did.
Scott Shaw of Bakersfield saw much of it play out before him. The retired postal worker was selling real estate in the months leading up the bubble's bursting, and he remembers how one seller in particular, in way too deep, didn't fully grasp what has happening.
"I went out to show a house that the owner had paid about $950,000 for, then used his equity to buy furniture, a swimming pool, more cars, et cetera," Shaw said. "Now he was trying to sell it for somewhere in the low $700,000s, and he asked me if he would have to pay the loans back. Wow! I had to catch myself from laughing. 'Yeah, you've got to pay it back.'"
The seller was a self-employed truck driver and his wife had a minimum wage job making sandwiches at a hospital. Their stated income had been enough for them to qualify for their loan.
But the pain went up the economic ladder, touching even some who should have suspected a bubble.
"Even a couple of Realtors I knew lost houses," Shaw said. "They bought high and then it wasn't worth what they paid for it. I was selling a lot of bank-owned properties in Oildale those days. Houses that had been worth $100,000 but were selling for $40,000. Crazy times, crazy times."
Shaw and his wife are in the same house they've been in since 2003. They'd walked away from temptation.
"At the time, I said, 'No, let's just sit on it.' It's a house, not a piggy bank," Shaw said.
Norman Maynard of Bakersfield wasn't so lucky. He jumped on what seemed like a great opportunity and lost his house.
"Bank of America would not work with us; they wanted us out of the house," he said. "They sold it at a reduced price and wouldn't offer me the same deal. The bank collected the mortgage insurance money that I was paying the premiums on. It was win-win for the bank and I had to wait four years to buy another house. And I had good credit."
He and his new wife, along with their respective grown sons, had agreed they should refinance the house and cash in some of that surprise equity. When the bottom dropped out, their adjustable-rate mortgage payment jumped from $1,600 to $2,600.
"Everyone won except for me," Maynard said.
His marriage survived the ordeal and the couple have been in a new house since 2011.
Dawn Reichel's marriage did not. Other factors were at play, but the financial collapse sealed the deal.
She puts it like this: "My house got stolen in the housing bubble."
It wasn't just any house. It was Reichel's family home. The roof she'd grown up living under. Her parents had given it to her and her husband when they'd moved out. Now she was losing her inheritance.
The circumstances were the same as for so many others.
"We got a ridiculously high appraisal, then refinanced," said Reichel, who lives in Bakersfield. "We did a bunch of home improvements. We used the money to rebuild the fence, fix the roof, repaint the house, upgrade our air-conditioning system. When we went to refi again at the end of the term, our house was worth $100,000 less than we owed."
Their monthly house payment almost tripled from $890 to $2,400. They had to walk away. And when the house was auctioned off one Christmas Day, it went for $58,000.
"When you're 50 years old and you're watching everything go down the toilet, it's not conducive to a happy marriage," she said.
Reichel still has not recovered financially. She has been a renter ever since the meltdown, though she says she is slowly but surely getting back on her feet.
Some people blame the Great Recession on bad policy, lax regulation, heartless Wall Street traders, this president or that president. There's truth in each of those explanations, to varying extents.
Reichel blames the American condition.
"So much of it is our sense of entitlement," Reichel said. "We feel that we have to have everything, so we get everything and then we find out we don't need everything. But we're willing to take risks to find out."
And so we did. Have we learned? Check back in 10 more years.