Ed Dolan's Econ Blog

Weekend Reading: The Human Side of the Housing Crash

We’ve all read endlessly about the effects of the real estate bubble on the banking system, GDP, monetary policy, and all the rest. If you have had enough financial analysis, if you are ready to read something about the human side of the housing crash, try reading Tana French’s latest novel, Broken Harbor.

The story, like all the author’s mysteries, is set in Ireland, but it could just as well have been Las Vegas, Spain, or the UK. Things start out well for Jenny and Pat, the central characters. A high-school romance, a storybook wedding, good jobs, kids, an SUV—what more do they need? Obviously, to “get on the housing ladder.” Buy that first affordable place, maybe not their dream home, but flip it in a year or two for a big gain and look for something that is really ideal. Uh-oh.

Looking for a place that will fit the budget of a couple of twenty-somethings on the way up, Jenny and Pat sign up for a three-bedroom home in a new subdivision. Brianstown is under construction on the site of a bulldozed fishing village called Broken Harbor, a too-long commute north of Dublin. To get the best price, they put their money down on a yet-to-be built. The brochure is full of promises, not just about the house, but about the shopping center, day care, community center, exercise facility and other amenities. Uh-oh, again.

By the time the reader gets a close-up look at the house, Jenny and Pat have been living there a couple of years. The house, thrown together in a hurry from the cheapest materials, is already starting to fall apart. So are Jenny and Pat’s lives. Pat had been doing so well that Jenny quit her job to be home with the kids. Then Pat’s job goes too. For a while they cheerfully keep spending as usual while sending out lots of resumes. Uh-oh, once more.

Maybe they have lots of company, you think. Maybe everyone in the neighborhood is in the same situation, so they can at least get together and commiserate over a cup of tea or a beer. But neighbors? Basically, there aren’t any. The Brianstown developers have gone belly-up, leaving a subdivision full of unfinished houses, empty lots, weeds, and the occasional rusting backhoe. When the money starts to run out and there are no jobs in sight, Jenny and Pat realize that selling the house and moving back to an affordable rental in the city would solve a lot of their problems. But no one is going to want a poorly built house in a half-abandoned subdivision. So, what do they do now?

I don’t want to spoil the plot, except to say that if you don’t like blood, maybe you’d better stick with the Weekend Financial Times. But if you want a vivid picture—almost too vivid—of the human side of the housing crash, this is a must read.


One Response to “Weekend Reading: The Human Side of the Housing Crash”

joseph glynnFebruary 13th, 2013 at 4:13 pm

Irish banks and their political croneys and developers crashed Ireland's economy and devastated our future prospects. Ireland's housing system has failed comprehensively. Its very difficult to sell any residential property, a friends family recently sold a house valued at 2.5 million euro in 2006 for just 500k. The banks are not lending, 250,000 jobs have been lost and large numbers of young people are emigrating.
Dig beneath the lies and half truths and it is clear we had a land-credit bubble; the collusion of two monopolies as old as Babylon. We need to tax land, so the market is transparent and nationalise the banks to stop them speculating on it, and to bring the issuance of credit money and its sectoral allocation under democratic control.