Monday, July 20, 2009

MUST READ BOOK: The Subprime Solution by Robert J. Schiller

Most of what masquerades on the Internet and in the mainstream media as profound real estate information is pure rubbish.

Bunk. Nonsense. Regurgitated pablum written by communication majors and TV anchors and not genuine real estate professionals in touch with their markets.

A prime example of how to actually write a real estate book can be found in author Robert J. Schiller's newest book, THE SUBPRIME SOLUTION.

This book in one word---brilliant.

Schiller, who coined the now famous phrase with his book "IRRATIONAL EXUBERANCE" is a market visionary. He doesn't merely report on what is happening but, more importantly, what will happen.

And he's dead on accurate. He has a proven track record beyond reproach.

THE SUBPRIME SOLUTION explores more than just the problems of the subprime mortgage mess and how to fix it but explains a host of problems related to the real estate business in particular and the U.S. economy in general.

Schiller echoes many of the themes I have raised in my writings for many years. For example, I believe that the assumption that U.S. real estate prices will continue to rise as they have for the last two hundred years is a false premise. It is my opinion (and Schiller's too) that much of U.S. suburban development is obsolete, based on the automobile centric business model of suburban sprawl. I wrote about this in my 2001 book, INVESTING IN LAND.

Obsolete properties do not rise in value. Neither does real estate in a stagnant and declining national economy.

This book is critical of government policy that caused the mortgage mess but also offers many solutions I completely support, such as subsidizing the financial information given to investors with tax credits. The rich can afford to buy great unbiased investment advice and get tax deductions for it. The poor and middle class cannot. They rely on paid professionals (like real estate agents) who have a profit incentive for giving biased advice.

Skewed opinions based on the financial needs of others and not your own leads to bad investment decisions. Which give us the mess we're in. Ask anyone who bought at the height of the real estate market their opinion on this issue.

I cannot recommend this book more highly. It is the best analysis of the subprime mortgage nightmare I have ever read and offers more ideas, solutions, and quite frankly dire predictions for U.S. real estate than any book I've ever read.


For the record, I do not know Robert J. Schiller or have any financial stake in the sale of his books.

Robert J. Abalos, Esq.