Such thriftiness has gone out of fashion. What was once considered undesirable — taking on large debt — is now seen as smart. And what used to be smart — becoming debt-free — is described as imprudent.
"If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years," said David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "It's as if you had 500,000 dollar bills stuffed in your mattress."
He called it "very unsophisticated."
Anthony Hsieh, chief executive of LendingTree Loans, an Internet-based mortgage company, used a more disparaging term. "If you own your own home free and clear, people will often refer to you as a fool. All that money sitting there, doing nothing."
Really, whatever financial harm comes my way when the bubble bursts will be totally out-balanced by the satisfaction of seeing prats like these two get beached.
Galley Friend C.L. adds:
Because in the New Economy, the laws of supply and demand are irrelevant!
Honestly, in five years these guys are going to be looking at the same kind of jail time that Merrill equity analysts are doing today.
Update, 1:15 p.m.: A commenter says:
No offense, but the laws of supply and demand are very much at the source of the real-estate boom. Look at the areas that are experiencing the biggest booms: dense urban areas and the surrounding suburbs. The supply of homes is in limited quantities due to strict zoning regulations that keep builders from erecting more homes. At the same time those areas are seeing huge influxes of immigration. Increased demand, capped supply, higher costs. It's the same reason why you can check out real estate in Raleigh, NC and notice that it's barely moved over the past 5 years. There is basically an unlimited supply of land to build on and homes are going up incredibly fast. Same with Salt Lake City, UT. The market is overpriced, but it's hardly a bubble that will lead to any sort of serious crash.
If only that was true! Look down the list of red-hot, out-of-control markets and you'll see cities such as Phoenix, and Bakersfield, and Naples--medium-sized, diffuse metropolitan and suburban areas with no space constraints.
And at the top of the list of percentage price increases over the last several years is . . . Nevada, lead by the insane market in Las Vegas. You know what they've got in Las Vegas? Land! They're not bumping up against rivers or oceans or 200-year-old suburbs in Sin City.
Look at this list of the top markets for 2004: Las Vegas real estate increased by 47.3 percent in one year. 47.3 percent! And it isn't because there's not enough sand to build on.
Look down the complete list and you'll find only 6 markets that could even charitably be described as dense and urban in the top 30. San Francisco and New York City--the archetypes of the incredibly expensive, densely-packed urban market--don't even make the top 40!
You tell me how any of this makes sense.