By the time the guys were 3 they’d learned that sooner or later their pretty balloons would pop if I gave in to their pleas to blow it bigger. It took a few bouts of tearful remorse, but they figured it out.

Also by the time they were 3, I’d learned that harping about mistakes seldom taught them anything. They simply had to see it enough times to remember the next time they were about to make the same mistake. Sometimes once was enough if the mistake was sufficiently painful.

Which is why I’m not going to harp about people who fell for all the “this is the new forever” hype about housing prices a few years ago. A part of me still wants to slap them silly, though.

“We just didn’t think it would happen,” Riverside County, Calif., foreclosure evacuee Leslie Aceves told cnn.com about the fall in prices that left her family with a $620,000 home while a similar model across the street went for $267,000 recently. “We just thought it would stop somewhere.”

Ay, but it will stop somewhere. It’s just that somewhere is considerably lower than Aceves and many others thought it would be.

Based on the last housing bubble, it probably hasn’t stopped yet. You do remember that we’ve had bubbles before. The one in the late 80s? How about the one in the late 90s? Any of that ringing a bell? No?

You’re not alone. For the better part of this century, everyone’s been acting as if housing bubbles had never  happened before. They have, probably since the first biped moved out of his little fixer-upper cave and into a custom model up the block.

The pattern’s always stunningly similar. Prices start to climb and Realtors shriek “buy now before you’re priced out!” People buy and prices climb higher. Affordability starts to fall, though, and that’s the beginning of the bust.

This one is a lot worse in part of stagflation of working-class wages, in part because so many people who couldn’t afford homes bought them any way with zero down, interest-only adjustable mortgages and in part because the financial industry was just as drunk as the consumer. Armed with new instruments that let them spread the risk and no regulation, the banks bet the ranch. And the condo. And the starter home.

“Those who cannot learn from history are doomed to repeat it.”

There’s a neat little bit of history out there on the net, a blog called Housing Panic. It was started in 2005, back when Realtors still were crowing “it’s a great time to buy!” but liar’s loans were beginning to proliferate because the credit-worthy had either already bought or decided to sit it out.

I’m tempted to print it all and force the guys to study it so they’re not sitting around 30 years from now moaning “We just thought it would stop somewhere.”

Yes, it always stops somewhere. And somewhere usually is much lower than you think while in the throes of it.

Copyright 2009 Debra Legg. All rights reserved.

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