The Wall Street Journal
Passion Comes With a Mortgage
By JAMES R. HAGERTY
January 2, 2008; Page B16
Researching America's real-estate mania of recent years, Daniel McGinn visited a family in Potomac, Md., and toured their new 9,000-square-foot house. It might have been a bit roomy for a family of five, and the lady of the manor admitted: "I could go back to a small house." But then she added: "I could never go back to not having two dishwashers."
Seeking bigger and better-appointed dwellings has probably been a human preoccupation since cavemen lay awake at night wondering why the Neanderthal next-door had a drier and roomier cave. But the swelling of the American home, which was accompanied over the past half-dozen years by low mortgage rates and vertiginous price rises, is a symptom of something new, according to Mr. McGinn.
In "House Lust," he argues that Americans have become obsessed with their homes with such fervor that even the real-estate bust of 2007 will not dim their enthusiasm. One factor likely to feed the obsession: the emergence of real-estate-besotted media, like the television shows that encourage viewers to ogle houses and renovations, and Web sites, like Zillow.com, that make it easy to look up the estimated value of most houses in the U.S.
To Mr. McGinn's credit, "House Lust" is not yet another attempt to show how you too can hit the jackpot with no money down. Nor is it a storehouse of revelations about the economics or psychology of real estate. Rather, it is a witty survey of the world of buying, selling and gossiping about houses.
Mr. McGinn, a Newsweek reporter, shows how insatiable our house lust can be. Mammoth houses might have enough closet and garage space to absorb the contents of a Home Depot, but they create problems -- such as how to fill up walls that look like blank movie screens. One interior designer "is always looking for large-scaled, three-dimensional artwork." There is a subset of house buyers who never consider purchasing anything but a newly constructed home. "You're not moving into somebody else's ick," one of these purists explains. Mr. McGinn talks to counselors who deal with couples driven by the stresses of renovation to the verge of breaking up or suffering from a syndrome called "post-renovation depression."
At a builders' convention, Mr. McGinn examines the latest home accoutrements. Among them is an Ultra-Flusher toilet whose sales reps say it can flush a whole loaf of bread. (Mr. McGinn notes that "it should come with a disclaimer: 'If you really need a toilet this powerful, please consult a gastroenterologist.' ") Mr. McGinn also hangs out with addicts of cable-television shows such as A&E's "Flip This House" and HGTV's "House Hunters." Real estate, he concludes, "has emerged as a full-fledged spectator sport." He contends that such shows aren't mindless entertainment -- they have refined us. "People are more aware that walls should be bathed in neutral colors; that countertops should be barren; that too many family photos will turn off potential buyers; and that Dad's beer-cap collection belongs in a box in the basement, not on the coffee table."
If you can critique homes, why not sell them? Mr. McGinn meets a high-school dropout from Georgia who became a real-estate agent and then built up a flourishing business when she advertised: "Buy or Sell a House With Me, Use My Moving Van for Free!"
To demonstrate how easy it is to become a licensed agent, Mr. McGinn sits through 24 hours of classroom instruction on one grueling weekend at a Hampton Inn. Those sessions satisfy the Massachusetts training requirement and set him up to pass a 90-minute exam 10 days later. The total cost for his tuition, exam and licensing fee is $413. Mr. McGinn doesn't go to work as an agent, though, because he knows from his research that most agents don't make much money. The enterprising lady in Georgia was an exception.
He is astute about one of the main drivers of the recent buying-and-building frenzy. "Nearly everyone I met who began investing in real estate in the early 2000s," he notes, had "lost money when technology stocks collapsed." Instead of learning the tech-bubble lesson -- that get-rich-overnight schemes rarely work -- investors merely transferred their delusions from stocks to real estate.
Mr. McGinn attends a huckster's seminar on real-estate investing and sees through the smoke and mirrors. Yet he succumbs to the low-key sales pitch of a broker who sells rental properties in Pocatello, Idaho. Even though he lives in Massachusetts, Mr. McGinn decides to sink his book advance into an investment property in Idaho as soon as the broker comes up with a good candidate. Mr. McGinn's wife is skeptical. He informs her that they could take a tax deduction if they make a ski trip to Idaho and check on the house. "She reminds me that she doesn't ski."
Without visiting the property, Mr. McGinn agrees to pay $63,500 for a house that the Pocatello broker recommends. A home inspector hired by the author sends an email telling Mr. McGinn that the house is structurally sound and seems reasonably priced, but he adds: "I felt like I needed a shower after I got out of there." Just before closing the deal, Mr. McGinn learns from the property manager that one of the tenants has been sent to jail for a parole violation; the other has been letting vagrants drink on the porch.
His reaction? "I decide to plunge ahead anyway."
A few months later, the property manager vanishes with the monthly rent money. The author's hopes of becoming a real-estate mogul fade. Worse, as Mr. McGinn confides, his wife now has the perfect retort every time he asks her how much she spent at the mall: "A lot less than you spent on that house in Idaho."
Mr. Hagerty is a Pittsburgh-based Journal reporter covering real estate.
Write to James R. Hagerty at firstname.lastname@example.org
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