“uh, I got a big mortgage…”
I was watching the 11 o’clock news tonight and there it was…the big ‘news story’ that people aren’t saving any money. I know that isn’t news to anybody here, but I’ll say it again….the media is a lagging indicator!
Anyway, they have Mr. Reporter go out on the street and ask people is they save money.
“Excuse me sir, do you save money every month?” …no
-next person-
“I was wondering if you have money in savings?” …no
-next person-
“How much money do you have left over each month?” …not much if any
So you get the point. The reporter asks a bunch of people if they have money in savings, or if they are saving any money. As you can imagine, most of the responses were ‘no’ and ‘not very much’.
They they asked one guy why he has no savings and why he isn’t saving any money….
“uh, I got a big mortgage…” “…I have to get a house now before it’s impossible”
Then the news story transitioned into how the cost of housing here was causing people not to save any money. The story mentioned the fact that the savings rate hasn’t been this low since the depression.
What I don’t get is why so many people will neglect savings, health insurance, retirement savings, etc. just so they can get some crazy mortgage and ‘own’ a house?!?!?
Believe me, I REALLY understand wanting to own a house, but at what cost? Maybe it’s just me, but the peace of mind knowing that I don’t have a $4000-$5000 mortgage…or better yet, a $2000 mortgage that I know is GOING to be a $4000 mortgage, hanging over my head is worth more to me than ‘owning’ a place I can’t afford.
How can I say most of these people can’t afford it?? How long have you been reading here?? Even the latest stats from the California Association of Realtors show that only 8% of the people in San Diego can afford the median priced home. That median priced home won’t even get you much ‘house’ in Southern California.
The story then goes to talk some financial advisor who said that people should try to save ’something’ every week.
Let’s get back to that famous line “…I have to get a house now before it’s impossible”. That is the mentality I have been talking about on this blog so many times. People want it, so they will do whatever to have it NOW! They don’t do the math, they don’t think about the future…other than what their property will be worth in it, they don’t think about back-up plans, they don’t think about retirement, they get emotionally set on something, and nothing is going to stop them…certainly not a little thing like income or savings.
Maybe it’s just me, but it is just amazing that people will just ‘assume’ that property will go up forever. It is that logic alone that they use to justify the option ARM, the interest only, the 2/28 ARM, the 100% financing, the NINA, the stated income. After all, who cares if you are buying no money down, when the place goes up, you will make money. Most Southern Californian’s think that real estate is impervious to any sort of decline now days.
The combination of negative savings, the price to income disconnect, and creative financing is the recipe for disaster. Do you wonder why all of the big lenders are headquartered in Southern California? It is the same reason tech was central to the Bay area, or why government contractors congregate around DC. That is where the action is. We saw what happened to the Bay Area when the ‘action’ returned to normal. What is going to happen to SoCal, when the RE/mortgage market returns to ‘normal’? Like many people have said before, we don’t need a huge dip to hurt lots of people. Even a flattening or small decline gets the first ‘houses of cards’ to start falling.
Per the news story tonight, we know that people aren’t saving any money. So if they aren’t saving, what are they going to fall back on when the ARMs adjust, and they can’t refi? Or they can’t afford the new ‘adjusting’ payment? What happens when people NEED to refi, but the ‘flat’ market means they need to pay for the closing costs out of pocket, instead of just ‘rolling’ the costs into the new loan?
Sounds like I’m beating a dead horse sometime…but I think most of you get the point.
That said, don’t forget to check out the Forum page. There are lots of readers with many areas of expertise. I think it can be an informative and entertaining place….let’s see what we can make out of it!
Thanks for stopping by, and I look forward to the comments on this post as well as the site changes!
SoCalMtgGuy
February 3rd, 2006 03:40
American social values have been turned on their heads by easy credit and slick marketing. People used to believe in saving for what they wanted… but that is no longer true. People also used to understand that the good times don’t last forever, so it’s wise to set something aside for when times aren’t good. That’s no longer true as well.
Peter Schiff gives Alan Greenspan a great deal of credit for this paradigm shift in the US consumer. http://www.financialsense.com/fsu/editorials/schiff/2006/0202.html
I also think that since 9/11 people for some reason feel that it’s their patriotic duty to support America by shopping. News flash America: Running up your credit card isn’t hurting the terrorists. It’s hurting you. So stop it!
February 3rd, 2006 03:43
socal, sorry for the off post but are there lenders in US that will loan on
foreign property, this case being japan?
The interest rates in japan for 35 year loan are around 1.9%-2.2,/10% down
but so many people are locked into their houses from the late eighties bubble that the market hasnt moved in 10 years. The prices im seeing in my neighbor hood are 70-80% down from 90`-91` period. It is cheaper to buy then to rent here in some places. Unfortunataly it is very difficult for a foreigner in Japn to get a home loan otherwise this tokyo could be a good investment with a 8-13% roi plus an non $ asset.
February 3rd, 2006 04:12
View From Tokyo
Unfortunately, I don’t know of any lenders that will make loans on foreign property.
You would be looking at a hard money situation, or private investor IF you could get the money.
Not a complete expert on that aspect though.
SoCalMtgGuy
February 3rd, 2006 05:37
Here is why I think people feel this urge to buy a house, an urge that has (I believe) resulted in an “upside panic” which will now be coming to an end.
A house provides two sets of returns, an “income return” — you can live in it and not pay rent — and a “capital gain return” — it (maybe) appreciates.
Once you buy a house, the “income” return is guaranteed as long as you can afford the mortgage payments. Most of your housing costs are fixed, and you know you will able to continue to live in your house.
But the income return doesn’t just include the house. You are also buying a permanent place in a community, which is why housing prices have risen to bubble levels in places where places have value. Having been both, I know that ownership brings a whole change in attitude compared with renting. You can participate in community institutions, knowing that this will be your community for the long haul. Friendships will be more longlasting. Etc. Maybe not in generic, just-built suburban America, but certainly in established places where there is some social component to the quality of live. Like Brooklyn, where I live.
So from an income return point of view, buying a house is a conservative investment, and it makes sense in normal times, just like stocks are the best long term investment in normal times. And people’s expectations are formed in normal times.
Now bring in a housing bubble. Yes there will be people who are speculating on the capital gain return. And there are people who HELOCed their way to selling out their own future for current consumption, just like the politicians they elect to do the same for all of us on a national scale.
But there are also people who merely feel that drive to lock in the “income return,” much of which is psychological and very deep. They need to “get a house now before it’s impossible” even if they are, in fact, locking themselves into a standard of living that is very, very low, with all their income going to the mortgage payment. They need to assure at least something for themselves and their children, the ability to go to the same school throughout childhood, make friends, etc.
These people, who just want to have the security of their own place and a community to call their own are victims of the “upside panic.” And it isn’t just speculators who will stop buying when the panic is over. It is normal people, who will realize that they can wait, save, and still realize their personal dreams.
A sad tale.
When we has the 1980s bubble, I had fortunately just had a housing market course in graduate school for city planners. I looked at income, looked at housing prices, and decided “this cannot be.” Although relatives said we had to buy something or we would never afford to live in the Northeast, we held out for seven years, until prices were fair. After the fall, I thought people have surely learned their lesson, and this will never happen again. WRONG!
February 3rd, 2006 07:02
Agree with Larry’s post above, and want to add another thought.
Herd mentality - unfortunately with the ‘genericism’ of society comes a societal pressure to give up one’s personal beliefs and standards and follow a ‘community’ standard. This is a significant part of the housing bubble that doesn’t often get attention. Who besides some of us diehards wants to be the only renter at a work happy hour? Who wants to be the only friend in a cirlce of friends who is missing out on 20% price appreciation per year?
Just taking a simple look at my situation, as soon as one friend bought a house, I could see the envy overcome another friend who not only felt obilgated to buy a house, but to buy a bigger house. This has happened multiple times within my friendship circle. It’s a perfect example of herd mentality. As another example look at car purchases; the neighbor comes home with a new car, envy fills us, and now we need to get a new car for some reason.
Combine herd mentality with the feedback amplification and now we have a self-sustaining and growing bubble. The only thing that will pop it now is if something happens to break the feedback cycle (rising rates and falling house prices) which then temporarily breaks the herd mentality before it reverses (Who wants to be the only one at work happy hour 100K upside down on a house?)
February 3rd, 2006 07:03
This blog is a big relief. Thank you for calling it like it is. I was about to buy a mediocre, old and ugly-looking condo last year here in South Florida, for a ridicolous amount of money (probably 4 or 5 times what the place was actually worth), because it was “now or never”. The deal fell through due to, amazingly enough, somebody else offering even more money (the usual story). In the end it was a blessing in disguise. Had I bought that place I would have lost ALL my savings (which amounted to a little bit more than 20% of the property’s total value… yes, I’m old-fashioned and did not want to get myself into anything other than a traditional fixed, 30-year mortgage with 20% down). And, of course, I would have been using about 95% of my monthly salary to cover the payments, the taxes, the insurance, the expenses, etc. Not to mention, here in Florida we have so many damn hurricanes and if one were to hit in my area, I would be in deep trouble. And what’s the point of having a house in order to sacrifice EVERYTHING else? No movies, no music, no nothing. Heck, even no food if things get really tight!
So, after being depressed for a couple of days, I concluded that loosing the condo was actually the best thing that could have happened to me. I kept all my savings and still am able to save a significant percentage of my monthly income (I used to save more than 50% of it for a few years, but now I moved to a bigger apartment). If I can not save money EVERY SINGLE MONTH, then I’m not happy with myself. I’m 27 and come from South America, where people might not have all the fancy gadgets that most Americans enjoy, but whatever they do have, they actually own. Big difference. And they also have a completely different mentality towards life in general. Here I’m able to balance both cultures and points of view, and decide for myself.
But, as you can imagine, I’m usually the laughing stock of friends and even relatives and family, who think I’m stupid for renting instead of owning, and constantly remind me that “I’m throwing my money out of the window every month on my rent”. Even my mother tells me this all the time. But I know better, and that is why this site is a big relief. I know now that I’m not alone. I still have my savings, which are only getting bigger, and patience is indeed a virtue. Hopefully time will prove all of us right.
February 3rd, 2006 07:12
(I’m 27 and come from South America, where people might not have all the fancy gadgets that most Americans enjoy, but whatever they do have, they actually own. Big difference. And they also have a completely different mentality towards life in general. Here I’m able to balance both cultures and points of view, and decide for myself.)
Big advantage. I had a taste of it moving from a poor working class city to an affluent suburb at age 10. When what was cool is not, and what was not is cool, you begin to see that what is cool is arbitrary. Rather than twist myself into a pretzel to meet every change in venue, I decided to decide for myself. And I decided (with the Stoics and Jesus) that among other things upsizing the expenditures required to be happy is a prescription for misery.
What is sad is those who aren’t riding the bubble to live extravagantly, but are instead “forced” by the bubble to live worse just in order to meet modest expectations. They are in fact not forced. But they don’t see it.
February 3rd, 2006 09:12
Thanks SoCalMtgGuy for a great site! I’ve been a daily reader for months. I know several people in the RE industry. They still can’t see the writing on the wall. They believe the holiday slowdown was typical and this spring will renew the buying frenzy. About a year ago I called July 2005 as the peak and it looks like that was about right.
People don’t seem to find the parallel between now and the roaring 20’s, a time when people in FL has to put signs on their property saying “NOT for sale” because of the housing bubble. People think these creative loans are new and they are smart for obtaining them, but what they don’t know is that the I/O loan became a standard in the mid-20s.
It all happened before and it looks like it will happen again: Deflationary Depression (global) beginning in 2008!
February 3rd, 2006 09:53
Tokyo,
Talk to a major international bank with operations across many countries. If you can qualify as a premier or ‘private banking’ customer you might be able to get a mortgage for property overseas.
http://www.banking.us.hsbc.com/premier/index_flash.html
I own property overseas. In most cases it makes sense to borrow in local currency, espcially if the rate is lower as in Japan. Also, if you rent the place out and the rent pays the mortgage currency fluctuations can’t screw you. Sucks to be paying a US$ loan if the local currency falls, for example.
February 3rd, 2006 10:00
“since 9/11 people for some reason feel that it’s their patriotic duty to support America by shopping”
For some reason? The president urged them to do so.
February 3rd, 2006 10:05
I agree with all of the posts here. I finally became so tired of being lectured about buying a house and the stupidity of renting that now - when people ask why my husband and I haven’t bought yet - I just say, ‘We can’t afford anything.’ That shuts them up at least.
I suppose I am very bitter because it all seems unfair. It’s as though it’s the luck of the draw. Were you lucky enough to buy pre-2001? Then you’re set. You didn’t buy then? Oh well. You can either grossly over-pay or rent. And renting isn’t fun. Oh sure, we save more money each month, but we want our own place. I want to paint walls and be able to have decent carpet and hang up my pictures without thinking, ‘I’m going to have take all of these down next year (or two.)’ It’s depressing. It’s not fun paying off someone else’s mortgage when all you want is a halfway decent place with a little yard. You work hard and for what? You’re not getting ahead because prices keep going up into the stratosphere. Even if prices stagnate, my husband and I are still screwed. Stuff in the DC area has more than doubled in just three years.
We’re in a bifurcated society, everyone who bought before the bubble and everyone else. It’s nice to think there will be a return to normalcy eventually. But until then, I’m still stuck in a lousy rental and it’s pretty depressing. I’m not trying to bring anyone down, but sometimes you just sit at your desk and think, ‘All I want is a stupid little house. Why is this so freaking hard?’ I don’t want an investment. I don’t care if it appreciates a dime. I just want a home of my own, a place where only I have the key to the front door. To get that, we’re probably going to have leave our families and move far away. Just to get a stupid house.
Perhaps the only thing this bubble has taught me is that economics is clearly not a science.
February 3rd, 2006 10:37
(I suppose I am very bitter because it all seems unfair…We’re in a bifurcated society, everyone who bought before the bubble and everyone else.)
Not entirely unfair. You have a choice of buying after the bubble.
As mentioned, my wife and I held out for SEVEN YEARS from 1987 to 2004. We spent most of that time crammed into a tiny ground floor front apartment overlooking an expressway. We also skipped owning a car duing that time, skipped big nights out, and generally lived as cheap as possible. The challenge — how little money could we spend and still be safe, healthy and happy?
The effect on our lives?
We have had less anxiety. Those deep in debt have worries.
We were both able to work part time while our kids were young. Those who bought at the top were not able to.
We have been able to save for retirement and our kids college. Those who bought at the top have been able to save less.
We have been able to give money to charity. Not much available for that purpose when you are mortgaged to the hilt.
After getting disgusted with our government policies, I was able to run as a protest candidate for state assembly to put my two cents in — see http://www.ipny.org/Littlefield/civicunion2020.html. Others could not have foregone the 9 months lost income for that purpose, or for other purposes (start a business, stay home with kids, etc).
Every year the difference between the return on our savings and the extra interest we would have paid with a larger mortgage grows. Even over the past five years, when both mortgage rates and investment returns were low, the difference was significant.
Admittedly, I’m the opposite of a FB, as crazy about saving and avoiding risk as others are about borrowing. But it worked for me. You get used to whatever lifestyle you have, so the fun of going up wears off, but the anxiety about going down - along with the pain of the fall — does not.
February 3rd, 2006 10:38
Of course I meant from 1987 to 1994, after prices had come down relative to income.
February 3rd, 2006 10:39
QUESTION
Is everybody with Internet Explorer seeing the 2 columns on the right hand NOT next to each other.
I have had 2 people tell me that the “about” doesn’t show up until you scroll half way down the screen.
Please, post, or e-mail me and let me know.
SoCalMtgGuy
February 3rd, 2006 10:43
Lilian - I fell for you. As a renter, I’ve been lectured again and again by coworkers and even my parents. People constantly ask me “when will you buy a place and settle?” Just like you, I tell them ‘We can’t afford anything.’ to shut them up.
And I am bitter too I guess. Just because I was born 5 years later than someone else I got punished, this is so not fair. My husband and I were discussing Plan B the other day if the house price was this high forever. And the only conclusion we came out was that we may have to rent forever. How sad was that!
And speaking of Plan B, can anyone give us some suggestions if the worst case senerio happens — the price is going to be this high or even higher forever?
Also I was puzzled by the post bubble result in Britain. Seems Brit. have a soft landing, even inventory is high, the price is still manage to stablize or increase a little bit. What’s the reason? Is it because exotic loans still prevail? Will U.S. market be so lucky? I’m not asking for a crystal ball, simply want some insight thoughts.
SoCal — Since people keep on saying things begin to pick up a bit during January, can you see it from your side? Such as how many loans? And the volunm? Can you please update the information over the time so that we can have clearer view of what’s going on? Thanks!
February 3rd, 2006 10:54
UPDATE…I THINK I FIXED THE ALIGNMENT ISSUE FOR INTERNET EXPLORER.
Let me know if you are still having a problem.
Thanks for bearing with me!
SoCalMtgGuy
February 3rd, 2006 10:58
SoCal, I also have a blog and when you view it with Internet Explorer the same thing happens. Don’t ask me why. Another reason why Firefox is so superior.
I also feel Lilian’s pain. As somebody who has a work Visa here in the US, I’m forced to live with the “I don’t know where I’m gonna be tomorrow” mindset. What if they don’t renew my Visa once it expires? What if my green card never materializes? What if this or that? I’d love to be able to settle down, start decorating my house the way I like, etc, but right now that’s just an utopia. On the other hand, the fact that I have ZERO debt (even paid cash for my car, don’t carry balances on my credit card, etc) allows me to sleep comfortably at night. That’s a big plus if you ask me. I just don’t understand the American fixation with debt and the whole “get it now, worry about it later” mindset.
And I do have a plan B. If things get really nasty here, at least I know I can return to my home country (don’t really want to, but it’s a viable option if the situation doesn’t improve), where I could buy (cash) a nice, new condo in a good area for the equivalent of a downpayment here.
February 3rd, 2006 11:08
viewfromtokyo ,
Yes, try out HSBC. I’m a former Londoner, and I used to have a foreign mortgage with them.
February 3rd, 2006 11:15
Lillian, Caroline, et al,
I have some good news, and some bad news.
First the good. Congratulations! By not buying a home at these inflated prices you’re on the right path to have a healthy retirement, be debt free, and live in a significantly less stressful environment. Trust me when I say you’re families will thank you for the relaxed / stress-free upbringing, and you’ll certainly live longer and healthier than the FB owners. Your reduced long term healthcare costs (from lack of stress) are alone probably worth the appreciation over the past few years!
You’re also significantly more likely to have amassed some decent savings, so you’ll be able to enjoy the things that make life worth living (meals out, theatre tickets, vacations to exotic locales, sports, etc). HELOC’s don’t count - that’s robbing Peter to pay Paul, and will catch up with you.
Now the bad news. You don’t own a home……yet. You must continue to believe that your patience will be rewarded (as we all do). Eventually you’ll be able to own a home with the growth of your investments, and the extra good news, you’ll probably be able to pay cash and not need a mortgage at all (assuming you’re currently investing the difference between your rent and the money you would be paying for a mortgage).
Time is your friend. I’ve never bought a home, and only ever invested the difference between my rent and (would be) mortgage in very conservative stocks / bonds. Over the past few years not only have I managed to amass enough wealth to retire, but I did it through the stock market crash…. everyone can do this. All it takes is discipline.
The most important virtue is patience, and if you have that, you can’t loose - period. No matter what the crazy economics are.
Good luck & stay strong - It’ll be worth it.
February 3rd, 2006 11:17
Test
February 3rd, 2006 11:17
SoCalMtgGuy,
The IE version looks fine to me now.
If you need website hosting for your new biz venture, let me know.
San Jose, CA.
February 3rd, 2006 11:17
(Speaking of Plan B, can anyone give us some suggestions if the worst case senerio happens — the price is going to be this high or even higher forever?)
We had a Plan B, but it was never implemented. Prices will come down relative to your income, though it may take some time (up to 5 yrs). Patience.
February 3rd, 2006 11:18
I would like to put in my 2 cents as a very non-bitter renter. Sure, in a perfect world my husband and I would love to have a little place to call our own, raise our child, and plant lilac bushes in the yard - i think that’s a normal and healthy human desire. But here in Boston, that’s just not the reality for most people. We were lucky in that we found a decent apartment for below market rent.
I am a self-employed writer who makes a decent living, though I’m not getting rich. I made a choice a while back that 9-5 corporate life is not for me, as difficult a decision as that was (especially during slow periods). I’m thankful that I do not have a 400k mortgage hanging over my head that would force me to work a job and participate in a lifestyle that makes me miserable. I know plenty of people who would quit their hated jobs, but oh, they have a huge mortgage on their tiny condo because they had to get into the market and now have no choice and no wiggle room in their lives.
Renting is fine for now. Who the heck knows what the future holds…
February 3rd, 2006 11:35
Caroline,
Believe me, I know what you are going through.
Let me ask you this: if all the ‘little people’ have to rent for the rest of their lives, and I have shown several times the disconnect between renting and owning, how long do you think the latest crop of ‘landlords’ can continue to rent at a loss?
Yes, many people got in ‘early’, but I hear very few stories of people actually renting for positive cash flow in California and other places. It is ‘all appreciation, all the time’. Even if people can rent where they are breaking even or at a slight gain/loss, it is usually because they took out some sort of I/O ARM or even option-ARM.
Yes, there are TONS of places that can be bought and rented for positive cash flow…just not in your ‘bubble’ areas. You would have to put down a LOT of money to even think of renting for cash flow if you were buying today in California. The return on that large of a downpayment is not very good.
There have been some great comments here. I think I will add a ‘RENTING’ board to the forums. Look for that shortly!
Thanks for stopping by!
SoCalMtgGuy
February 3rd, 2006 11:39
Another option that hasn’t been mentioned is moving. Rent while it’s cheap and save up for that 20% down. If prices don’t correct to come in line with incomes in your area, take that pretty nest egg and buy in another location of the US.
I think the reason that people have done this is because salaries are perceived to be so much less then in bubblious places like CA.
Actually they aren’t always lower. I found a postion in Nashville that paid better then my Sacramento salary for the exact same job. Do a little homework and compare salaries across states; you may be pleasantly surprised. And even if they are lower, compare their housing prices to real wages and places like the midwest start looking really really good.
Remember that small down payment here may equal a huge down in another state - which gets you more house, better rates, and of course more money at the end of the month for savings >; )
February 3rd, 2006 11:50
If you have not bought, sit tight and watch the crash.
Greenspan said history has not dealt kindly with these
speculations.
February 3rd, 2006 11:51
Opps!
“I think the reason that people have done this is because salaries are perceived to be so much less then in bubblious places like CA.”
I meant to say “the reason that people haven’t done this”
February 3rd, 2006 11:52
I’m actually enjoying this housing bubble.
It keeps the renting market less competitive and more affordable
I see this simply as a stealth tax on the innumerate people among us. Just like all those people who play the lottery every week, the current new house buyers are very bad at math.
Let the ownership illusion continue cause I’m a happy renter with big bank account.
Good luck.
February 3rd, 2006 12:00
Hey everyone,
I’m a SoCal renter, and have been since 2000. I moved to California with $16k in my pocket and had about 10k left over once I got all my furniture and amenities.
My first job was at a dotcom which went belly up after 6 months. It took me working two jobs a day just to cover the rent and living expenses. I didn’t care, because I didn’t want to tap into my savings. In the years that followed, I got married, and got where I needed to be professionally.
I was bombarded in 2003 by many real estate people who wanted me to get into the red hot housing market. At the time my wife wasn’t working yet, I had grown my savings up to 44k and I was having a hard time with my conservative side wrestling with my “gotta join the bandwagon and play the mega-appreciation game” portion of my psyche. They were presenting me with all these loan options to make the 350,000 condos I was looking at affordable.
In the end, I stopped looking at homes because I realized not only would my wife and I be stressed and worried over making the payments, we would have no savings, no retirement and no fun. Also, we had more living space where we were renting compared to what we would get buying a condo in SoCal. I told the real-estate people to go screw and I moved into a cooler rental in Irvine.
Currently I pay about $1500 a month to rent my place, but in the time since I was looking at properties, I’ve gown my savings to $71k, have a new Infiniti G35, pay all my bills on time, am not in debt (credit cards or otherwise), have 10k in my 401k and have 7k invested in my wife’s IRA account. I have the peace of mind knowing that if I really want a home, I can either wait for the bubble here to pop, or more to a state where I can actually have a lawn to go with the front door.
So to all the people depressed over still being renters, I say don’t worry about it. Look what you can accomplish if you focus on savings and not overstretching yourself financially. I’m only 30. I’ve got plenty of time to buy a home. I’m awaiting this bubble bursting with a hot tub of buttered popcorn because it’s going to be interesting to see what happens here.
February 3rd, 2006 12:13
Saver and Everybody else
The one thing that keeps me going and being able to sleep at night is that I have “0″ Debt. I only do hope that when this thing finally blows-up that it will still be worth it and I will be in a better position that all those debt ridden “sheeple”. If everybody was a saver like me there wouldn’t be any US economy.
I have watched over the years people from my close family getting on with their lives. They all have houses now, all bought within the last 5-6 years. Almost all of my cousins/close relatives have used equity from their homes in one way or another in order to finance their spending/vacations etc. However experience has taught me that nothing is what it seems.
One example of this is the following:
In 2001 my first cousin had lost his job after the .COM crash and he lost his 150k+ Job salary(he was making almost 2.5 time more than me). He was unemployed for about 4-5 months and after the first 2 months he asked me to lent him some money to pay up his bills. This person 2 years before blew his “signup bonus” on a 35k Jeep SUV and he didn’t manage to save almost anything. In 2002-2003 he bought his house with 20% (this money was taken from his mother’s home equity) downpayment that he put down for a 350k house. He also spent about 20k-30k on the house after that for repairs. Then in 2004 he got a HELOC on the house in order to pay off his credit cards and get a New 45k+ Audi. Right now he brags that his house is worth 470k-500k and he urges me to get a house now before it is too late. He also got a new job a couple of months back and during the Christmas he spent 3-4k in toys only for himself ($1,300HDTV, $400 IPOD Video, $600 LCD TV etc) He felt alot richer after he got that HELOC.
Bottom line is that the way things are headed even in the slightest economic downturn alot of people will be in a very uncomfortable position. I believe that 8/10 people are in a similar position like my cousin.
They have a nice house? YES
They have a nice car? YES
But they still can’t afford a $1,400 new transmission for the Cherokee or $600 for the Service on the Audi.
In the current housing market things will take the downturn MUCH more quickly than in the early 90s. The reason is the flow of money from the stock market to the housing and their the use of the houses as ATMs. Not everybody owes the house but he also owes ON the house.
What worries me most in the current situation is the amount of money that seems to be flowing in the market. Almost everybody that I know blows money like there is no tomorrow, from the goverment to the closest neighbor.
February 3rd, 2006 12:27
NJSucks
Good comment.
Greenspan really should take the biggest blame for this.
He allowed all this liquidity and all the consequences. Also you realize the US dollar is not what it used to be. I just came back last week from a biz trip in Europe. There is so much erosion in dollar. You don’t realize this till you leave the country. We are all being fooled by the fed numbers. My friends the real inflation is so much higher than what is reported.
What worries me at night is not the housing bubble but the Banking institutions. How many will blow up ?
Remember LTCM in the mid 90’s and how fed bailed them out ?
Even is you have a big savings account, you have to check out the financial institution you bank with. I don’t trust the so called FDIC. I have moved a lot of my savings into Swiss Francs and Energy/Mining stocks.
So in conclusion, even the happy renters with the big savings accounts like us are not save from a housing crash because of the risk on Banking institutions.
February 3rd, 2006 12:32
NJ
SO what are you saying? You willl never buy a home unless you can do it in cash? I dont know too many people that fortunate. I am sure one day you will take the homewoner plunge and that will make you a debtor also so be easy on these FBs.
February 3rd, 2006 13:00
I should mention here what normally happens when a bubble deflates. The median existing home price reported by the National Association of Realtors is the median price of the homes that sell. So if all the homes that sell are mansions for the wealthy, because the bottom has fallen out of the rest of the market, the median home price may actually rise! The tipoff will be falling sales volume, as sellers hold out for prices that buyers will not, or cannot (higher interest rates, tightening lending standards) pay.
After the 1980s housing bubble in New York, prices fell very little in nominal dollars, but very few houses sold. Gradually inflation brought income and housing prices back into line, and by the time it did, the inflation-adjusted price had fallen by one-third.
Could that happen again, or will there be a crash? It depends on how many FBs there are. Most market watchers are predicting a long-term plateau.
If, as SoCal predicts, these exotic mortgages drive people into foreclosure, however, you’ll have banks dumping the property at market regardless of what the market is. Then people will see what their houses are actually worth in the most recent sales, perhaps inducing more sales. It is worth noting that the commercial property market, where the homeowner-holdout factor does not apply, absolutely crashed after the 1980s, and in most markets has never recovered its former level.
It could also be that you’ll have a mini-crash to a still-high level, followed by several years of limited gains relative to inflation.
February 3rd, 2006 13:22
test
February 3rd, 2006 13:32
Thanks, everyone, for your kind comments.
To wait indefinitely is the most painful and stressful for us. We plan to have children soon and can’t wait 20 years for the bubble to deflate. Going to see an open house this weekend, we might be the first ones to “jump in”…sigh.
February 3rd, 2006 13:57
All,
First of all, nice site SoCal, good work!
Superb comments from all. Really enjoy the different views and interpretations of the market.
If I didn’t have a house, there is NO WAY I would buy one (or would have in the last couple of years). To the folks renting, you are smart. Don’t let anyone tell you otherwise. You will have your house, and I don’t think it will be more than 24 months till this whole thing is crashed.
I suspect that we’ll see a heavy grind down this spring, leaving very high inventories for the fall. Heavy inventories carrying into the spring of 07, with a bloodbath in the spring/summer of 07. By winter 07, rock bottom.
February 3rd, 2006 14:41
For those who might need a history lesson.
It is 1993.
http://query.nytimes.com/gst/fullpage.html?res=9F0CE0DC1431F93AA25751C1A965958260&sec=&pagewanted=1
Now, feel the pain of home ownership ?
February 3rd, 2006 14:44
Lillian;
You may not realize it but you are in the cat bird seat!
First of all the price to rent ratio in the bubble areas is way upside down. IOW you can rent much cheaper than you can buy on a cash flow/mortgage basis. The idea that you’re throwing away money on rent is not correct, IMO. What do you think paying interest payments is? And how would it feel if you buy at the top of the market only to watch your equity drop 20% or so and be paying high interest and pricipal for something not worth the money?
I think you’re probably pretty young because you sound like NOW is the only opportunity you’ll ever have to own a house. Not so. We’ve been in a 5 or 6 year mania and as people belly up and foreclosures come on the market and all the over building chokes the system, people will be just as desperate to sell as they were in 2005 to buy. Instead of writing letters to sellers trying to convince them to sell their homes, it will be the other way around. THAT is when you will be able to write your own ticket. For instance: I Lillian will be willing to rent your house if you will put in new carpet, new paint job, and I want to hang my pictures anywhere, and also have pets without a deposit, and I want the right of first refusal to buy the property in the event you have a bona fide offer at the end of the rental period, and I want the right to buy the house for X should I choose anytime between now and the expiration of the rent period, and this is how I’m willing to help you out Mr Landlord.
Real estate is very cyclical and rather slow and when people are in the middle of the cycle they think THIS is the way it will always be. We are just now at the beginning of the Renters/Buyers market.
You are in an enviable position compared to your peers who bought 2 or even 3 years ago and are strapped with giant mortgages and a spiraling down cash flow.
February 3rd, 2006 14:51
Caroline:
Don’t jump in now. You’re just trading one set of problems for another. By waiting a few years (2 or 3 not 20) you could save a couple of hundred thousand dollars depending on the house and area you’re looking at. NO KIDDING.
Centex the big builder has VOLUNTARILY been knocking $100,000 off their prices recently. TIME IS ON YOUR SIDE. If you buy now your equity will only disappear. THERE WILL BE A TON OF HOUSES TO CHOOSE FROM!!!
February 3rd, 2006 15:26
Hey peoples,
We gotta have more “pep rallies for the savers” more often! I especially enjoy reading about your specific cases. I for one have yet to purchase a home in the DC/Baltimore area, and instead have killed my debt and am beginning to save ~40% of my take home pay into a high yield savings account, and am maxing my 401K at work. Hopefully by the time I have a large sum of money saved for a down payment, the housing market will “rectified”. Keep the great comments coming!
February 3rd, 2006 15:32
right now renting is good, owning is bad. i have owned my homes for the last 18 years and since have sold. there’s been more than a dozen people telling me what a brilliant move that was. nobody knows how bad the market will fall. but you can be sure (looking ahead) that in a high inventory environment that has come down 20% you will find more than a few desperados willing to unload at minus 30 or even more.
there is no question that the downward trend has already begun. this is not the time to despair.
February 3rd, 2006 15:33
There’s nothing wrong with patience. We bought our first townhouse in the D.C. area when we were in our early 40s. And get this, we signed papers in Nov. 1997, literally weeks before all hell broke loose. I’d been chomping on my bit since 1986.
I actually got a price break because the builder couldn’t sell the unit. Paid $152K, same unit lists for $435K today. But we bailed in 2002 for $252K and moved to the northeast before prices got too ridicules here.
February 3rd, 2006 15:34
Do not buy to keep up w/ the jones. If you have to buy now make sure you will be able to afford your payment in a downturn. At this point in the game stay with fixed rates on loans. Do not fight the fed!! They raised rates and burst the tech bubble and they are doing the same thing now to housing bubble. It will take some time for rate hikes to work through economy.Do the opposite of the herd and you will make money long term. The smart money has already cashed out and waiting on the sidelines in most cases.First in first out works well. If you can leave hot areas there are pleunty of good buys in other parts of the country.There is life outside california for sure as I have learned.
February 3rd, 2006 15:35
i think i like the new digs of this blog.
socal - how are you gonna keep out the trolls/spammers?
February 3rd, 2006 15:49
Cereal,
Right now I will leave it open until things get out of hand. At that time, I will make it so that people have to REGISTER. You can register now if you would like. The registration is under the “millionaire next door” book.
Once you are registered there, (I’m not 100% sure about this yet), but you will be able to use that login at all ‘wordpress’ powered blogs. Look for several other bloggers that are getting large amounts of traffic to leave the ‘free’ blogger (blogspot.com) sites and host their own with wordpress.
Thanks for stopping by!!
SoCalMtgGuy
February 3rd, 2006 15:58
Enough of this renting is good owning is bad crap.
It’s only bad to be an onwer currently if you bought at the peak or have an ARM that will adjust soon or a crazy IO loan. I think most people that got in before it went nuts on a fixed and plan to stay there will ride it out. After all its just ‘paper’ equity so who cares if its gone. If have the income that justifies a current fixed loan payment do it.
February 3rd, 2006 16:15
JJ,
Don’t make it black/white, good/bad, rent/own. I don’t think anybody here has anything against homeowners that bought a place to live with a fixed rate mortgage. Those aren’t the people that contributed to the ‘bubble’ anyway.
What people are talking about is TODAY, in many areas, the only way many people can buy is with ‘exotic’ loans.
I know there is a problem when I talk to people who have owned for a while and they tell me 1. “I couldn’t afford to buy my own home today.” and 2. “I WOULDN’T spend the money to buy my home today.”
What happened is that the flood gates were opened. There was a massive increase in the ‘pool’ of people that could now buy homes.
I don’t knock owning a home at all…I knock owning a home if you HAVE to use exotic financing to do it.
It makes no sense to buy a place TODAY when the interst only payment is over 2 times what I pay in rent! I would have to pay 3x my rent to get a fixed rate mortgage on my home. I’ll save the difference and have less financial stress in the meantime.
Thanks for stopping by!
SoCalMtgGuy
February 3rd, 2006 16:55
I am fortunate enough to have bought a house in 2003 and just recently sold in Dec of 2005 making over $200K. I have no debt, three cars and interest on profit from the sale is currently paying 3/4 of my rent each month. I’m only 34. I don’t want to brag but I feel it is simply luck like Lilian said, “those who bought before the bubble and those who did not”. It would just have been Lilian in my posistion and I am in hers. I really hope this market will correct itself so that other people will have the opportunity like I did at least to make their lives better. It would be idiotic for me to hope that my house will continue to appriciate…especially when the people that bought my house used a 20/80, 100% financing and I even help with their closing cost. Man, they did not even spend one dime to buy my $400K house. Look what this world is coming to. Be patient Lilian and alway see life in other ways than just material things. I really don’t feel much richer now then when I first bought it in 2003. I still bring lunch from home to work everyday. Like I said, it is just luck and I will be the same person today if I lost all that.
February 3rd, 2006 17:44
Caroline: I feel for you, wanting to have a house for the kids and all. I have been in that position, delaying kids until I had a house.
But it’s not going to work for me. Due to a couple of bad moves (one to an economically depressed area), I am only now getting my savings together. If I were to wait until I could buy a house to have kids, I’d be too old. Unless my husband got a stellar promotion— not something to count on as a game plan, even if the chances are better than winning the lottery.
So reading this site has given me a new game plan: We’re going to rent a house and save what we can, and have kids while renting. Yes, that means a lot of sacrifices in terms of what we can and can’t do— I’m a big fan of built-in bookshelves and the like— but really, the trade-off is in not becoming a bubble casualty.
February 3rd, 2006 17:53
Pay attention to history. This has happened before. For those of you who haven’t clicked on the New York Times link someone posted above, here is one representative quote.
“There are foreclosures all over the place,” she said. In the Northeast, in particular, foreclosures have increased phenomenally in recent years, according to statistics compiled by the Mortgage Bankers Association of America.
That was from 1993, when housing was cheap — especially for those who had a big downpayment, because as stupid as banks are in one direction today, that’s how stupied they can be in the other direction tomorrow, demanding a huge downpayment, massive doc income, etc. Everything in 1987 was just as it is today! If I was smart enough to figure it out then (with the help of a graduate school housing market course), people should be able to see it now. “Fool me once, shame on you, fool me twice, shame on me.”
We had a baby while renting. Spent a couple of nice years with her in our rental apartment (a better one, for rents had fallen too). By the second baby, the housing market had adjusted, and we bought (after holding out for five months while the owner of a house we were interested in tried to get a better price).
February 3rd, 2006 19:23
“I am fortunate enough to have bought a house in 2003 and just recently sold in Dec of 2005″
Similar story here. In 2003 my wife and I sold the townhome we owned for 5 years and bought a house. A beautiful thing on the surface, we had brand new house in a great neighborhood in SoCal. We were homeowners! The reality was that even with our hefty 150K down payment we still had a $390K mortgage. We were lucky enough to secure a 5-year adjustable loan at a little over 4% interest. We knew going in that once our rate adjusted we would not be able to afford the house. Over the next two years we saw the house appreciate at an astonishing rate. We did not “take equitity out” we lived frugally, not that we could splurge after making our mortgage payment anyway.
We sold the house last year, banked the money and are now renting an even bigger house in the same great neighborhood for less money than we were paying to own. I don’t have to worry about cutting the grass or paying property taxes or the water heater breaking. Renting can be a beautiful thing.
February 3rd, 2006 20:47
Having worked as a planner in the Central Valley and now in the Antelope Valley, I am seeing all the land development frenzy. As a planner in Hanford, I monitored housing prices, and saw prices jump from $160K to $240K in four months, and from $240K to $320K in four more months. I know $320K sounds cheap for single-family homes in California, but keep in mind this is a relatively depressed area, where the median income is about 40K. Many buyers are “move-uppers” - other are folks from the Bay Area and SoCal that bought with their equity. Developers are applying for subdivisions like mad, and farmers are selling their land for a fortune (those who got out of Williamson Act contract). Same thing happening in Lancaster. Over 7000 single-family lots have been tentatively approved… that’s enough new homes for the next seven years that have not yet been built. I can easily see an oversupply of homes in the Antelope Valley when the market goes sour. Remember, just five years ago, new homes in the AV were going for 160K, and now they are in the 400 range. Anyway, this is the news from the front lines, from a city planning standpoint.
Thanks for a great blog — many excellent posts.
February 3rd, 2006 21:41
never forget that the first four letters of “mortgage” mean “dead” in French, and you’ll be fine.
“American dream” my curvy pink ass.
February 3rd, 2006 23:04
Somebody mentioned on one of these blogs the other day - babies don’t know whether their parents rent or own. If you’re going to have a baby you need good insurance, cash in the bank and time to take care of it, not a house and a mortgage. You don’t even have to worry about what school district you’re in for another five years.
February 4th, 2006 05:46
To all bored renters: I have owned, and I have rented, and I like renting better. Homeownership is a lot of work: every weekend, my husband is working on a maintenance or improvement project. He needed that outlet when he was young, but is tired of it now. Bored renters with young husbands, I understand your pain. Wifes who want a home to paint and fix up, I understand your anxiousness.
But be patient. Prices are already coming down. The longer you wait, the less you’ll pay for a house. The longer you wait, the LESS equity you will LOSE.
It’s much cheaper to hire a painter for $4K to paint your rental, than to lose $200K in equity, because you bought 2 years too soon. Go ahead, paint your rental, plant a few bushes. Stop thinking that you’re improving your landlord’s property. So what? If those actions keep you from buying, they are worthwhile!
February 4th, 2006 10:13
SoCal,
I’m very impressed with the level of discourse on your Blog. I started following housing bubble blogs last summer after seeing a story about TheHousingBubble2 in the LA Times. I’m curious to find out if you’ve noticed that there seem to be more and more bitterness, animosity, and flame wars on Ben’s blog in the past few months?
I agree whole-hartedly that the rent/buy situation is not a black and white issue. These decisions are as different as the individuals who make them, although I can’t imagine there are too many people left who should be shopping for neg-am I/O loans at this time.
Last year I left one large oil company for another, and relocated from the Texas gulf coast to southern California in the process. My wife and I were in a position to buy a house in Houston before we left, but after spending a year agonizing about buying a home in SoCal - we decided that, despite a high family income, relatively low debt, and no kids - we can’t afford a house in SoCal. So we just signed a 24 month lease on a great 4 bedroom house. The payments will be a cinch, and we’ll be saving more than ever. The derision from my colleagues and the uncertainties associated with renting are things we’ll just have to live with for a few more years.
Yes, I would love to own my own home. But in my case it would only make sense if YOY appreciation averages about 6% per year for the next seven years. How many would take that bet?
February 4th, 2006 11:19
Lillian:
Why are you stuck in the loop, thinking that owning would be so much better?
I bought pre-bubble and I’m so sick and tired of renos and everyone fixating about real estate that my husband and I are contemplating leaving for Europe for a few years. He’s contacted an agency to find a job overseas.
We are so sick and tired of this boring life where everyone is focused on houses money and material stuff that we are actually contemplating many different avenues. We want enriching experiences and owning a home is not all it’s made out to be!
And I think many more people will feel the same as us within the next few years. That’s just another reason why prices will go down!
February 4th, 2006 12:19
I guess I’m one of the fortunate ones who bought before 9/11. Personally, I tend to be a little on the conservative side financially, $65k mortgage and no car or credit card debt. I make double payments on the mortgage and pump about $2k/month into my retirement plan, and yes, I do have a family. People at the office actually give me a hard time for being a “tightwad” because I save. Even my relatives want me to “step it up” (read: go deeper into debt for a bigger place) but I sleep real well at night, which is more than a lot of people can say. I’m in the securities biz and manage some rather large portfolios (deep 7 figures), mostly for seniors. When I start talking to them about how they did it the story is almost always the same- “We got our house paid off in our early 40’s and took the mortgage payment money and plowed it into the market (stocks & bonds). We let it ride for 30 years.” Although, as they say past performance is no guarantee of future results, I have seen what works and how large portfolios are made, I feel like I’m living in the Twilight Zone. The average savings rate in the U.S. went negative in Sept. and the average homeowner has equity of just 56%, a ‘70 year low, and this is after the price run-up according to the Federal Reserve. Now, consider that approx half the people in this country have their houses paid for, where does that leave the other half? I have seen statistics stating that the total debt in this country is currently in excess of $40 trillion, over 3 times GDP! We are living in the largest credit bubble the world has ever seen and its fallout will likely be catastrophic. I cannot emphasis enough how important it is to be building a war chest right now and if it means having to rent then do it. When this bubble blows there will be blood in the streets and opportunities will abound, but only for those with access to cash. The highly leveraged people will likely be blown away like chaff in the wind as is starting to happen with some current FB’s. What will be the root cause of a meltdown? One never knows, but I could see some eventual terrorist attack or the Asians diversifying out of U.S. treasuries and pushing our interest rates thru the roof, or maybe a combination of the two. I don’t mean to sound doom and gloom, but for the prudent I believe there will be some spectacular buys on quality assets at fire sale prices in the not too distant future. Keep up the great blog; you’re a lifeline for financial sanity.
Warmest regards,
invest3
February 4th, 2006 13:34
“We got our house paid off in our early 40’s and took the mortgage payment money and plowed it into the market (stocks & bonds). We let it ride for 30 years.”
That’s our plan, baby, and we’re well on my way. Your story was very encouraging. Thanks!
February 4th, 2006 15:06
MC White,
I’m glad you like the discourse here. Hopefully I will be able to keep it ‘open’ (no registration) for a while. I know that the spammers/trolls started taking it’s toll over on Ben’s blog.
That said, I think the rent/buy situation should be a mathematical/financial one, not an emotional one. I have said it plenty of times before, if you find a place you like, can put money down, get a fixed rate loan with a payment you can affod, plan to stay a while, and realize that real estate does NOT always go up, then BUY!!!
I just want people to make GOOD financial choices! I have friends that just bought a 2nd home in Palm Springs. They put money down, got a 30yr fixed, and the payment is peanuts to what they earn. They don’t care if it goes down…and they can EASILY afford it.
The problem is when people buy a place with a stated interest-only loan, and their ‘game plan’ is to sell in 2-3 years when the ARM adjusts…and bank the ‘easy 6-figures’.
Again, I just want people to have the information available to make a GOOD decision. I don’t think most people realize the impact that STATED INCOME has had on this market. I think many people figured that these homebuyers were ‘making’ a lot of money…the truth is that it is mostly creative financing!
Thanks again to all of the people that are making this blog a place of excellent discourse and information!
SoCalMtgGuy
February 4th, 2006 15:07
invest3,
Where do you suggest one keeps their war chest ?
Non USD denominated assets ? If cash, what currency ?
Thanks for the good note.
February 4th, 2006 15:26
Don’t forgot there is a board in the FORUMS that discusses protecting profits and investments. I would suggest posting there as well for a response.
SoCalMtgGuy
February 4th, 2006 15:29
Oh joy! Oh joy! My parents own their house!
They paid it off a few days ago and I just heard about it today. Mortgage over, three years early, the house is THEIRS.
Thirty year standard mortage, refinanced fifteen years ago.
Yes, they’re in their sixties. And now they own their house. (Maybe… someday… I will too.)
February 5th, 2006 02:32
Hmpf. I’m definitely not in the camp of “renting is terrific.” It blows chunks. I’ve always rented, and it’s always sucked.
It just so happens that buying at recent prices would suck even worse.
February 5th, 2006 05:15
SiliconValley_Geek,
The absolute answer is… it depends. There are a lot of factors that go into portfolio allocation, risk tolerance, time horizon, goals, etc. If you want to play a potential collapse in asset prices, I would keep assets in 100% US Treasuries and keep the maturities on the short end, say under 5 years. Even if a collapse hit the economy, the “Helicopter” Ben Bernanke could always print his way out of it.
Invest3
February 5th, 2006 08:53
A house used to be a place to live and raise a family. Family was the cornerstone of the concept in that a “home” was where the family had roots, lived their lives, raised kids from little ones to young adults and so forth. Moving was the exception not the rule. One had neighbors and bonds with the neighbors and the neighbors kids. People did not think of a home as an “investment”. The goal was to eventually pay off the mortgage, and living somewhere 20, 30, 40 years was not uncommon. So people made darned sure buying the house was a realistic financial commitment that fit comfortably into their lives. The home and neighborhood, was the sun around which the family’s life orbited.
But people got “smart” in the year 2001 and realized what a “Great Investment” the house could be. No longer a place to live and raise a family since those values matter little compared to the 50’s, 60′, 70’s, it was a place to “build wealth”. And instead of home values going up maybe 5% per year (not including all the maintenance and up keep) 20%, 30%, 40% or more became “the norm”.
Anyone with some life experience and wits knows how this will turn out.
My prediction: within a few years, Residential Real Estate will become THE most hated class of “investment,” and a house may well be on its way to once again become a home.
February 5th, 2006 09:53
Pat
Excellent post. Right on the mark. Like I have said many times and others have too… a house is a ‘home’ not an ‘ATM’. And this message goes for the equity strippers, flippers AND people that have cashed out before the plunge.
I will be honest and say I have contemplated with the idea of cashing out my equity and renting before the plunge goes into full speed. But I have small children and a wife who adores our ‘home’. I finally realized it was greed that was giving me this idea of cashing out. I now realize what’s more important is the happines of my family. A home for my children.
February 5th, 2006 13:36
Pat - excellent post. Maybe the upside to the coming crash will be a return to the radical notion of staying put and building community.
February 5th, 2006 16:03
Lillian/Caroline:
I’m in a similar boat as you. I’ve been renting for five years now and have endured five straight years of pressure and ignorant comments from friends/colleages about how I’ve missed the boat on housing, how I’m wasting my money on rent, how I NEED a house to be anyone. Some of my friends are on their second houses trading up to keep up with some of our older friends who have much more wealth (which is a losing proposition in my opinion).
I fully believe that some people are pushing houses/expensive autos/consumerism because they feel stupid doing it and want to see others doing it as well.
Hang in there though, things will get better. Life’s been a little lonely around here because my friends can’t afford to go out anymore since they are spending so much money on their house. At least I have time to write blog comments.
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