So how crazy was the housing bubble?

Let’s take a look at this lovely house in Compton, CA.  Location, Location, Location is what real estate agents tell you when they aren’t mentioning what a great time it is to buy, or blaming people not buying houses for people not buying houses.  Anyway, what a *fantastic* location for this 600 sq ft. charmer on South White Avenue.   Back in 2005 I print screened this because I couldn’t believe that this thing listed for $379,000 in 2005 and Zillow shows this house sold for $365,500 in December of 2005.  $365,500?  I wouldn’t have paid $365.50 for this thing! Let’s look at what this house looks like today:

This isn't a Starbucks type of neighborhood

Here’s another property I clipped in ’05, this one at 11453 Chickasaw Trl in Chatsworth. This charming cottage sold for $260,000 in early 2006. It’s currently listed at $49,000, for the land only since the house burned in the wildfires in ’08.

How could the appraiser possibly assess the property for that much? And how could the mortgage companies give people money for these properties?  Lots of people have asked this question before, but what I mean is when you sell mushroom pickers a $720,000 house there is a certain sort of poetry to it. How could you live with yourself selling dumpy houses in Compton for at least 260% of its true value? Certainly no poetry there.