But possibly there’s more to it this time. Obviously, no one wants to discuss it because it would be so much more “convenient” if it would just kind of go away on its own and we could just return to the “good old days” and restore the single family home to its rightful place in the American Dream and move on. If housing would just get back to “normal,” we could also move beyond the mortgage and bank fraud crises, and the government cover-ups of those frauds as well. The cover-up process would then be complete and time would ultimately heal the wounds of the victims (like its healed the victims of slavery, disabled veterans, or land theft from American Indians for example). But, at some point, we may just have to deal with the fact that single family home ownership as we have come to know it, may well have been permanently altered by by the mortgage fraud crisis and the subsequent government cover-up of this fraud.

Those familiar with marketing know that a “product” is often defined as the “bundle of benefits” that accrues to its purchaser. We seem to be ignoring (or at least trying very hard to ignore) that, in addition to the benefits that result from a very long-term lease (i.e. not being forced to move out against your will), the ability to attend local public schools and make use of other locally provided public benefits, the ability to have some control over the maintenance and upgrading of the property, etc., the single family home was previously viewed by most middle class Americans (and lower class Americans who could still take part) as a safe place to store and accumulate wealth. In fact, for a good part of the last century, it was the primary way to store and accumulate wealth for these groups. The failure of the government to protect the wealth and savings of these groups from the massive fraud that was undertaken to put these savings at risk, coupled with the failure to prosecute those involved in conducting this fraud, exposes as a myth the notion that a single family home is safe place to store wealth and savings, and removes this “benefit” from the “bundle” of benefits that purchasers of homes used to think they were getting. As is painfully obvious to so many at this point, this is by no means a “trivial” benefit or “extra” feature that came along with this “product” as a side benefit, but instead was a critically important attribute that no longer exists.

Without the benefit of adequate government protections against these kinds of frauds, residential real estate is much too highly leveraged and risky of an investment to be suitable for most of those in the bottom 90%. It would be illegal for a stock broker to sell a similar client an investment of similar risk due to suitability restrictions. How adequately are the current buyers being informed of the risks they’re undertaking? In the S&L crisis the government prosecuted and jailed the fraudsters, sending a clear signal to home buyers and the financial marketplace that these kinds of frauds would not be tolerated and would result in claw-backs, stiff financial penalties, and prison sentences for those who attempted and profited from them. This time truly is different, and this lack of government protection is likely to have far reaching implications for the residential real estate marketplace well beyond the foreseeable future. Yes, it would have been costly to prosecute these frauds, but the costs of not prosecuting them is likely to be much higher for most American not in the top 1%. The real costs of plutocracy surface in many ways not captured by our measurement systems.