A Daily Show host Jon Stewart recently interviewed P.J. O’Rourke, author of a book about Adam Smith’s The Wealth of Nations.  O’Rourke summed up economics in a single sentence for me when he said that “Adam Smith realized that free markets forever vibrate between fear and greed.”

In case you haven’t been paying attention, we were into greed in 2004 — these days we’re into fear.

In classical Wall Street jargon, Bulls are into greed, and Bears are into fear.  I’m not at all sure how each of these animals got picked to be representative of their respective market attitudes, but for our purposes it’s unimportant.  Most folks would agree that we’re in a bear real estate market now in most areas, though I’ve used this blog often to point out that any given neighborhood can swing one way or the other.

Bubble Bloggers can be fun, but their readers sometimes like to portray Realtors® as being bullish to the point of being full of bull.  I’m less concerned about that than I used to be, partly because as time has gone on I’ve become more bearish about the market than I was, and partly because I’m more open to surprises.

Imagine My Surprise

If you don’t like real estate prices in Northern California, wait a minute.

In 2002 or so when I decided to leave the glamorous, he-man world of computer programming for a career in real estate, I previewed a Cameron Park home that was listed at about $300,000, which I thought was unspectacular at best.  About a year or two later, I saw the same home, still unspectacular at best, on the market again for $400,000 and watched it sell not long after.

Imagine my surprise.

Last week in South Sacramento, I was working with a perfectly wonderful buyer on a bank foreclosure.  We’re opening escrow this week on a three bedroom, single family home listed in the low $100,000s.  She’s renting a similar home in the neighborhood, and on an FHA loan she’s going to be paying about as much for her mortgage as she was already paying in rent.

Imagine my surprise.

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