Money is closely related to people’s feelings of shame and pride, and to their sense of self-worth, says behavioral economist Sara Wedeman. This crazy, roiling and flailing economy where nothing makes sense is pushing many Americans to the fight-or-flight instinct.

"The more people have followed the rules and tried to meet social expectations, the more frightened they are," says Wedeman, a principal with Economic Behavioral Consulting Group in Philadelphia. "People are having to choose between blaming themselves or admitting that everything that promises us safety is out of control."

In the last six months, many people have seen their retirement plans destroyed by investment losses some economists place at an average of 50 percent. Depending on where they live, their homes may have lost significant value. And 2.5 million people lost their jobs in the last four months, according to the U.S. Bureau of Labor Statistics.

Calls to suicide hotlines are up, spending is down, while saving has increased, and almost every week brings a grim story of people pushed to murder and suicide by their fears.

"There’s a lot of shame among people now," Wedeman says. "People are blaming themselves because it’s still easier than admitting that everything is completely out of our control. Many people have just gone numb and shut down."

The so-called "Fear Index," the Chicago Board Options Exchange Volatility Index created in the 1980s, has set new record highs every month since September, and even in a good week remains far above a normal level.

For all these frightening numbers, there are people who are doing OK — and there are still people buying homes, says Richard Stabile, a RE/MAX broker in Bergen County, N.J., who blogs about real estate, borrowing and buyers.

Some industries and occupations have weathered the economic downturn better than others. "It comes down to how the rest of their lives are. Are they in fear of losing their jobs?" Stabile says. "People are frozen. They’re trying to protect themselves and they’re looking back and saying, ‘Shoulda, woulda, coulda.’ "

Some people even feel fortunate, says Dalton Conley, the chair of New York University’s Sociology Department.

"Some people are feeling lucky that they are doing OK, and their feelings of envy and restlessness from a few years ago when it seemed like everyone was flying high are gone," says Conley, whose new book is "Elsewhere, U.S.A.: How We Got from the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms, and Economic Anxiety."

"How people are feeling is about how their lives are framed. There are a lot of emotions and they are very complicated. There’s guilt and regret, there’s relief that a seemingly unreal period of extravagance really was unreal," he adds. "For people with the double whammy of lost jobs and disappearing assets, they are numb if not scared and angry."

There are those who will be out of the real estate market for a long, long time.

"I wonder how many people can’t be buyers because they destroyed their credit, they’re over-financed, unemployed," Stabile says. "I bet 15 (percent) to 20 percent of people can’t get a loan anymore."

Even so, Stabile says, "A house that’s priced right will sell. The market is trying to find its legs and we’re all watching as money comes into the system."

The economy has weeded out some buyers and thinned out real estate agents. The National Association of Realtors membership rolls are down about 10 percent, according to spokesman Iverson Moore. And local associations have seen their membership fall off more dramatically — usually about the time members are asked to re-up their dues.

Norm Miller, a professor of real estate at San Diego University School of Business’s Burnham-Moores Center, says that the agents and brokers who remain are the committed, full-time professionals.

"Market cycles tend to clear out the less committed agents," he says. "But this is too much of a good thing — we’re beyond a normal down cycle when even the full-time people are hurting."

Insurance professional Roger F. Smith, who provides health insurance for members of the Beverly Hills Realtors Association, says many of his clients are changing their health insurance policies.

Smith estimates that about 50 percent of real estate agents have health care coverage — many obtaining it through their spouses’ employers. People who buy their own policies are those who are proactive and committed to their profession, he says.

"We are working daily with realtors to downsize their premium load to match their earnings potential," Smith says. "We are helping them incrementally downsize their coverage to catastrophic coverage — it makes no sense to carry a higher premium that isn’t sustainable in the long run."

Smith says that mental health or substance abuse claims among his clients aren’t numerous now. But he has noted that people seem to be skimping on pregnancy coverage, suggesting they are putting off starting families.

"We probably saw more requests for mental health coverage and medications a year ago," Smith says. "We’re not seeing that now."

Stabile says that brokers in his area are feeling pretty beat up.

"A lot of agents and brokers aren’t doing any business at all — last year, 13,000 homes sold in an area where 10,000 brokers are licensed," he notes. "My partner sold 100, so that’s 99 people who didn’t have a single sale."

Like Smith, Stabile says he believes the core of committed professionals will emerge and succeed as the economy starts to make sense again.

"The boom took the cream away from the pros — people gave their listings to their aunt, their cousin, the guy down the street," he says. "Now people are looking for the skilled broker to list their homes because they want every advantage to sell."

Many people want to move but feel they can’t right now, Wedeman says.

"People like me wish they could move but it’s a horrible time to sell," she says. "I feel kind of trapped because I’m being called on to pay through the nose for these crises because I’ve been doing the right things."

Miller notes that history shows real estate membership goes down and misbehavior goes up in down cycles.

"Some misbehavior isn’t a clear ethical violation, like letting a client overprice and holding an open house knowing it won’t sell (just to) look for new customers," Miller says.

But there are also clear-cut violations.

"For example, setting a lowball price and then flipping the house to friends — we’re starting to see that happen in Florida," Miller says. "Bad times bring out all sorts of bad behavior."

Marty Graham is a freelance writer in California.


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