My Own Experience Of A Housing Crash

In the summer of 1980, my father lost his employment with the Seventh-Day Adventist church. My family moved from Pacific Union College in the Napa Valley, where we were renting, to the Auburn area, in the foothills of the Sierra Nevada Mountain range 45 minutes drive north of Sacramento.

My father set up his own non-denominational evangelical Christian foundation Good News Unlimited.

We bought a home. Then we found another home and decided to buy it and sell the first. It was an inflationary-era. President Carter was presiding over a bumbling economy. Real estate had been jumping in values dramatically. It seemed like a good move.

It was not a good move. It was almost a disaster. If you count the wear and tear on our psyches, it was a disaster.

Paul Volker was in charge of the Federal Reserve and he started hiking interest rates up to 18%. This stopped inflation. It also killed the real estate market.

The mortgage interest rates my family was paying was killing us. They had two homes they had to make payments on.

My father has never cashed in on his preaching. He regards it as holy work and he's always labored for a minimal salary.

My mother was ill and not able to get a job.

I persuaded my parents to let me go to public school — Placer High School. They had a journalism class. It seemed very exciting to me. I anticipated growing up to be a journalist.

I had spent ninth grade at Forest Lake Christian school. It was a tough transition for me to leave the warm bosom of Pacific Union College and the Seventh-Day Adventist church.

Until I was 14, all my friends were Seventh-Day Adventists. All the people I knew well were Seventh-Day Adventists. Now most of the people I knew were not Seventh-Day Adventists.

I felt lost and lonely. I did poorly at school. I failed two of my classes in my first semester in high school. I finished the school year with less than a C average. I got sick a lot. I was miserable.

Then I transitioned to Placer High School. It was my first experience of public school. It was scary. A lot of kids thought I was a freshman and they wanted to initiate me. Nothing horrible happened. Over the next three years, I finally found my way.

This was largely thanks to Journalism. I took that class in my first semester at Placer as well as a media class. I proceeded to the school newspaper, the Messenger, where I became Editor in my Senior year.

My sports editor was Rob Stutzman, who'd go on to become a spokesman for Arnold Schwarzeneger. The editor before me was Eric Schulzke, who'd go on to be a spokesman for a Republican congressman from the area, and then Eric got a PhD in Political Science from UC Berkeley and became a professor at BYU.

I remember flying to Australia in 1982 and my dad lugging many of his books along to sell. We had to store a box of them under my feet on the plane. I was not happy with that. It felt embarrassing to be lugging them all around. But we needed the money.

I remember in 1980 we took a bus to Orlando, Florida, from Washington D.C. It was a grueling trip. Then we took the bus back. It was cheaper than flying.

By economizing and by my father's hard work, and help from friends, we survived the housing crash. My parents sold one of their homes in 1984 and we emerged OK. I don't know how many years the worry over these matters took off my parents lives.

I had a friend I had invested money with in 1980, about $2,000, my lifetime savings. He was making phenomenal returns in real estate. Then the housing crash hit and his real estate schemes were smashed. It took us a while to get our money, and the return was considerably reduced.

He left the real estate business, wandered in the world, and finally became a masseuse and settled down and got married and had a kid.

We've all found our way through these scary times.

From Wikipedia:

Paul Volcker, a Democrat,^[5] was appointed Chairman of the Federal Reserve in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan.^[6]

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.

The federal funds rate, which had averaged 11.2% in 1979, was raised by Volcker to a peak of 20% in June 1981. The prime rate rose to 21.5% in '81 as well.^[7]

These changes in policy contributed to the significant recession the U.S. economy experienced in the early 1980s, which included the highest unemployment levels since the Great Depression. Volcker's Fed also elicited the strongest political attacks and most widespread protests in the history of the Federal Reserve (unlike any protests experienced since 1922), due to the effects of the high interest rates on the construction and farming sectors, culminating in indebted farmers driving their tractors onto C Street NW and blockading the Eccles Building.^[8]

Nobel laureate Joseph Stiglitz said about him in an interview:

Paul Volcker, the previous Fed Chairman known for keeping inflation under control, was fired because the Reagan administration didn't believe he was an adequate de-regulator. Our country has thus suffered from the consequences of choosing as regulator-in-chief of the economy someone who didn't believe in regulation.^[9]