Only eight months ago, this Beacon Hill home sold for $315,000. Today, its owner is asking for $549,000. According the Redfin, the burnt house will have to be destroyed and could be replaced with "a 3,600 sqft home that features 5Br/4.5Ba including a second master with office on main floor, self contained ADU on lower & 2-car attached garage." A permit for the new house is ready for the buyer.

The property—which is near the point where I-90 crosses the worst street in Seattle, Rainier Avenue—has potential views of Mt. Rainier and will be close to Judkins Park Light Rail Station when it the opens in the year some of us may not even live to see, 2023. This house is clearly for a visionary.

Many urbanists who believe that neo-classical economics is economics might not see anything unusual in this sharp eight-month price increase. It represents the natural state of the housing market and nothing more. Scarcity can fully answer for the sudden appearance of $234,000 in the home's new value. There is no dark energy in the universe of their housing market. Matter behaves normally.

Because you can see exactly where I'm going with this, I want to take an interesting turn and consider the new evidence that the housing crash of 2008 was not caused by poor people who purchased homes with money they didn't have. These poor people, as story has been told again and again, had (like all bad people) bad credit. They were called NINJA (No Income, No Job, no Assets). They walked right into the trap of teaser rates. They did not read the fine print. They caused the great crash that the government had to clean up. But it's now looking like the crash was triggered by wealthy middle-class people who were flipping houses for fast and easy cash.

Gwynn Guilford of Quartz writes:

Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economists—Stefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

But why were so many wealthy people defaulting on their mortgages?

Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But as a Federal Reserve Bank of New York report from 2011 reveals, an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.

But when they could not flip their houses, which is when the music stopped, they suddenly had big debts they could not sell or pay. This, and not sub-prime delinquencies, triggered the Great Recession, which we are still paying for.