Risky lending trends could bust mortgage boom

By F. N. Chancellor Smalkin

May 9, 2005

AS A SELF-STYLED hipster, I was somewhat perturbed when a new trend caught me off guard this spring. Another school year is closing and students are lining up residences for the fall. I learned that my friends are purchasing homes, and I'm not.

At first, I suppose I was slightly jealous. I can't afford a house. But as I thought more about it, I realized that neither could they.

This piqued my economic curiosity. So I looked harder at what was going on around me. My earlier perturbation turned to concern as I listened to my friends' responses and saw new, disturbing trends emerge.

First, I noticed that some of my friends had already amassed small fortunes in real estate from prior residences and investment properties. This kind of industry is not disturbing. But when I asked one friend about her methods I noted a second trend, and it raised hairs on my neck.

"The real estate market always goes up."