If you check out Alyssa Katz’ blog, you’ll see that the author of Our Lot obviously reads a lot of economics blogs. I hoped the book would distill a lot of information about the real estate bubble and it’s associated economics and make it understandable to an average person. The jacket copy promises that the book helps … understand what really happened, how it affected our homes and communities, and how we can move on to a future we’ll want to live in.
On those promises, the book succeeded partially on the second item and fails pretty badly on the others. The book does contain scores of sad tales of real estate villainy and loss. Horrible as these are, they bury the nuggets of real information rather than illustrate them.
What was economic situation that precipitated the financial meltdown over the last couple of years culminating with bailouts and handouts to the rich last fall? From the mid 1990s through 2006 real estate prices outpaced inflation and comparable housing rents driven by speculation, government incentives, fraud, and wishful thinking. Like any Ponzi scheme, the only way to keep things afloat is to bring in new people willing to pay ever-higher prices. When the game of musical chairs ends, the people holding title lose it and possibly lose more. This explanation does appear in Our Lot but it’s buried.
There are many villains in the real estate bubble. Some of them are featured. But the book often failed to explain why these actors were bad, and almost always failed to paint a complete picture of the crime. What is most often omitted is that the victims
usually were witting accomplices who just weren’t as smart as other perpetrators. Investors
thought they could make a quick buck and got burned. The tale of woe includes a foreclosure at the end, but doesn’t delineate between gains they thought they would make and actual losses.
Another service that Katz could have done but didn’t would be to better explain how the individual scams worked. I’m thinking particularly about chapter six, entitled Crime Spree
, which covered the loosely defined crime of mortgage fraud. In other words, people that tried to scam usually lax lenders. The centerpiece is the case of Phillip Hill, who paid William McGill and Renee Donewar to buy houses and condos with Hill’s money as down payments after which the latter two would assign the properties back to Hill. The loans were for inflated amounts. But how Hill extracted the inflated money from the loans Katz never explained. And never explained what he did with the money. She explained that the general modus operandi was have a front home improvement company get paid for work it never did. I’ve re-read this portion a couple of times and still can’t tell if that’s how Hill did it. All I can tell is that the loans were inflated. Instead I learned how Hill was such an asshole that he took control of a homeowners association because he owned so many of the houses on paper. And he collected their homeowner’s dues and perhaps kept that money. But that doesn’t add up to the $100 million in fraudulent loans Katz describes.
That’s a big failing of Our Lot: the constant referencing of irrelevant minutia like Hill’s takeover of a homeowners association. On page 105, the book describes how home builder Jeff Spitzer’s fluffy mustache and golden shock of hair had not yet turned white.
Phillip Hill had been hired to play a temple builder for the opening ceremony
at the 1996 Olympics on page 133. There’s lots and lots of that stuff.
Katz would have been better served by a standard high school paper structure. Tell us the broad outlines, then in further paragraphs get more and more detailed and provide the supporting information. Finally, explain the implications of the information before summing up. Or something like that. But stop jumping all over the place and don’t put details in the middle of higher level explanations.
It’s not all bad. From what I can tell, the information that’s there is all correct. It does give a good feel for all sorts of chicanery. The mortgage fraud perpetrated by Phillip Hill that I previously mentioned, the reader will get a good idea of the scale of the fraud perpetrated by the guy and how many people he affected. Chapter 2 shows a pretty good progression of the relaxation of regulation and how government relied on home ownership to prop up part of the economy over the years. The book gives the reader a good idea of the relaxation of lending standards that would be necessary to bring in more buyers. Lower standards meant more people who wouldn’t be able to pay the money back. It’s spread out over too many individual stories, but it’s there.
But I wouldn’t recommend the book. And that’s coming from someone who agrees with Katz’ politics for the most part.
A couple other blogged reviews:
Title: Our Lot: How Real Estate Came to Own Us
Author: Alyssa Katz
Cover creator: Natalie Slocum (designer)
Imprint / publisher: Bloomsbury
Format: Hardcover
Length: 228 p.
Publication date: June 2009
ISBN-10: 1-59691-479-3
ISBN-13: 978-1-59691-479-7
Subject: Real estate business — United States — Marketing
Subject: Real estate business — United States — Managing
LC classification: HD1375.K348 2009
Did Dickens depress those who saw the dislocation of the Industrial Revolution? My rhetorical stance is simply that the book begins to read like a page turner AND informs me of the ever-baseness of business people. Do I comprehend her and is it worth reading over-and-over to get a sense of the crimes…until something better can be recommended, I guess this is it.