According to Bloomberg this morning, U.S. Mortgage Foreclosure Filings Rise 90% in May. Just about on time, if you ask me. The other shoe had to drop at some point. Newton was right; gravity is a law.

Some of us here in DC, or in the rest of America for that matter, remember when the cost of housing seemed roughly proportionate to the salary you might make. This equilibrium of which I speak means that if you were a bigtime lawyer or successful entrepreneur you might live in a big house in McLean, if yo
u were a government type you could choose a nice brick house in Arlington, college kids could make a go in some parts of Dupont, and there was cheaper housing still. You know, not some communist utopia of free housing for all, but at least ten years ago it seemed to make sense. You might not live in Georgetown right away, but there were good options out there.

Then, as near as I can tell, the Baby Boomers got closer to retirement, the stock market still sucked from the Tech Bubble, and magically, real estate started jumping ahead 38% a year in "value" while salaries increased at about 2.3%, and jobs got more unstable in general. To deal with this phenomena, many people thought this was a dandy way to "make money in real estate," selling one domicile for more then you paid, buying something more expensive, throwing in some new curtains, and selling again for yet more money. Neat trick! Where can I sign up?

Of course, more people, caught up in real estate fever, "wanted to own" their own chunk of the magic! Naturally, since salaries weren’t rising along with the price of housing, many of these poor souls started taking out interest-only mortgages, since their station in life didn’t really afford them $700,000 starter homes. But at least this way, they "owned" a chunk of the action, and besides, gravity had been declared unconstitutional, and housing prices would continue to rise until a single bedroom in a college flophouse would go for $850,000, plus condo fees.

Of course, the variable-rate, interest-only mortgages would not always charge the same low rate. The rates, um, would vary, probably upward. And for those expecting the Ponzi scheme to continue, the results would be unsavory.

My point? Taking the long view can be vital when considering all kinds of transactions. Sure, the market has cycles, but at the end of the day, housing is a social system by which we divide up resources to those who work. Big movie stars get big houses. Average Joes might get something more modest. But the system usually has some integrity. When housing begins magically galloping ahead at 38% a year, when it turns into a magical way to "make money" and not a system that allows people a place to live, it loses that integrity.

And then, as in all Ponzi schemes, it’s a question of who gets their money out before the whole thing gets discovered.

Ergo, the future of housing is that people will need places to stay, sleep, cook dinner, and keep their stuff. And the cost of housing must make some sense.

Perhaps not radical thinking, but these days, thinking that people should be able to afford their homes is radical.

I’m not sure why, but this morning I am reminded of one of my favorite quotes from the French futurist Michel Godet. It has to do with being insecure with our intellectual contributions to whatever debate:

"Remember, even if everything has already been said about a subject, it hasn’t been said by everybody, and it hasn’t been understood by everybody."

So, wondering whether you possess the necessary wisdom to speak out? Afraid of sounding hackneyed? Think you’ve got nothing new to add?

Just do it. Just write it. Just say it. You may reach a new audience. You may persuade people more than you realize.

I was discussing with a colleague "how to add value" as a strategist within an organization, when she told me something I will remember.

"Every executive has the responsibility to be interesting in a meeting. If we’re going to spend thousands of dollars to all get together, we had better be telling each other interesting stuff about the world."

Now there’s a simple recommendation. If you want to know your insight is helping people, first ask "Is this interesting?"

Of course, the advanced course is "What can we do about it?"

-garland