Why be cautious about buying a home in today's market?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

But the bottom line is that while, yep, caution is a GOOD thing (always has been, always will be), it's not necessary to go all "Doomsday" and "Apocalypse." If everyone would please just stop pitching a fit and contributing to MORE "consumer misconfidence" everything will "right itself" soon.

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This is all relative, right?  "Doomsday" and "Apocalypse" are extreme concepts.  If I were an undergraduate or graduate facing $40k in debt for school costs and an environment of layoffs, the idea of home ownership would be a pipe dream for the forseeable future.  That might not be an economic apocalypse, but it's an extreme personal challenge for many people. 

Culturally, things can adjust (for example - with young people spending more time living at home after college), but their are many individuals and whole swaths of America that are facing rough times.   

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I think we're seeing it the same, for the most part, but attacking the issue from two different sides (if that makes sense).

My point is that SO many people are panicking over this. What good does that do? None. What HARM does it do? LOTS.

I go back to my earlier post where I called people, on a whole, a bunch of dumb, panicky animals (or fundamentally insane, if you prefer). If you have enough people screaming over a situation and predicting the Apocalypse, you're going to HAVE an Apocalypse. If you take the Y2K hysteria, the aftermath of the Depression ... heck, how about the race riot of '19? ... you'll see that insanity, despite the actual reality of the situation, is contagious and dangerous.

What we have now is a problem, yes. Is it permanent? Nope. Will it eventually ride itself out? Yep. Always has, always will. The circumstances may not be EXACTLY the same (but then, we're not the same people are we?), but if there's wholesale panic, the results WILL be the same. Its ALL a matter of reaction to stimuli.

(I may not be well versed in economics, but I DID major in sociology with a minor in psychology, so I think I kinda have it with the human aspect of the situation)

Since the economy is driven, pure and simply, by human beings, what do you think we should do? Subscribe to wholesale panic as another poster implied? Or calmly and cautiously, ride it out? Don't over-extend on credit, but don't choke the economy and hoard your money ... buy what you NEED, rather than go insane and indulge in stuff-therapy ... pay your bills and be cautious in creating new bills.

I'm in no way belittling anyone's concerns ... my point is simply that panicking ... or urging others to panic as another poster did, is doing nothing but harm to the situation.

[Anonymous]

I'm one of those graduates with 47k in student loan debt. But you know what - getting my Master's degree allowed me to increase my income by 55k per year. That's 55k more per year than I was making when I started school, which was a pretty decent salary. Not bragging, just saying that the 47k investment in my education is paying off bigtime.

[Anonymous]

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@Anonymous wrote:

I'm one of those graduates with 47k in student loan debt. But you know what - getting my Master's degree allowed me to increase my income by 55k per year. That's 55k more per year than I was making when I started school, which was a pretty decent salary. Not bragging, just saying that the 47k investment in my education is paying off bigtime.

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Not taking your post as bragging, Desifink!

You know, people like you (and in FICOScott's post) aren't the people I really worry about getting whacked by the economy and the ensuing panic, it's the people that hold "blue-collar" jobs.

Starting off your life with a substantial debt is bad enough, but it's an investment. At SOME time you WILL be able to make a higher salary. With those on minimum wage jobs, the ceiling isn't so high.

[Anonymous]

Here's another article  that will make you ponder whether you really want to buy that home.  Note that he explains that the median price, nationally, will fall to $70,000 because there will be so many homes that are at 0 value.

http://www.oftwominds.com/blogjuly08/70K-median7-08.html

Oversupply and Compression: How the Median House Price Will Fall from $215K to $70K   (July 30, 2008)

(Edited -- thanks for the link, but please adhere to the TOS for articles.  -Peas)

Message Edited by WhirledPeasPlease on 07-30-2008 08:40 PM

[Anonymous]

Someone wrote: 

"Let me just go ahead and make a few observations about some of your statistics. Oil is up because of speculative trading, decreased supply and increased demand. Rising food prices in the U.S. are mostly a result of increases in gas prices, not because we have any sort of shortage. Inflation may be at it's highest in 17 years, but take a look at the average rate of inflation. It's 4%. Seeing as how we're at 5%, anyone who is getting upset about rampant inflation is completely absurd. Right now the biggest issue we're facing is the decline in the value of the dollar, which is making oil more expensive, which is making gas more expensive, which is making pretty much everything else more expensive."

I guess you always see the glass as half full.  I see it as empty.  It shouldn't come as a surprise that the majority of Americans don't see this crisis -- the mainstream media refuses to give it the coverage it deserves, primarily because the mainstream media is now run by corporations who have a vested interest in preserving the status quo.  If you go to Alex Jones' website, infowars.com, you will find information on how certain Washington journalists are prohibited from reporting on the worst parts of the economic crisis.  This is all political.

OIL IS NOT GOING TO GET CHEAPER.  It's just a matter of time in 2008 before oil starts ratchetting up to $200 a barrell to stay.  OIL IS NOT "UP" BECAUSE OF "SPECULATIVE TRADING."  That is a red herring used by the politicians (Democrats AND Republicans) to draw our attention away from the larger issue:  increased demand around the world.  PEAK OIL means that oil has already passed the peak -- there is still oil in the ground, but it's on the downward slope.  That means that this oil is on the right-hand side of the bell curve.  Oil will still be in the ground in 50 years, but it will become increasingly difficult to get that oil out of the ground.  After 50 years, oil will be worth gold (maybe diamonds).

If you do the research, you will find that the Saudi oil fields have long since passed their prime, and there are many reputable academics and financial analysts who believe that the Saudi government has been hiding the fact that they have decreasing oil supplies. 

There is plenty of evidence out there that you can find on your own -- evidence from "reputable" academics and analysts -- that will explain the scope and magnitude of this crisis in detail.  But if you are going to bury your head in the sand and ignore the problem, then you are not going to be prepared.

[Anonymous]

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@Anonymous wrote:

Here's another article  that will make you ponder whether you really want to buy that home.  Note that he explains that the median price, nationally, will fall to $70,000 because there will be so many homes that are at 0 value

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Okay, I gotta ask this: Who in the HECK is Charles Hughes Smith and why in the HECK should anyone gives a rat's patootie what he's saying???????????

Is he nationally recognized? What are his credentials? Is he syndicated??

Now, please bear in mind that I didn't read the entire article. I don't listen to the ramblings of crazies in my local mental hospitals, either. I kinda lost interest after he predicted that the world was going to be taken over by superhuman cockroaches and to stock up on tin foil.

Okay, maybe he DIDN'T say that ... but I wouldn't have been surprised.

But seriously, why would anyone take the opinion of a random blogger seriously?? My DD (13/yo) can blog all about the economy, too. It doesn't mean that she knows what she's talking about.

But I'd take her word over your looney blogger's any day. o_O

[Anonymous]

Oh, and for the record, his blog specifically states that NO reproduction of ANY kind is allowed without prior permission.

Do I assume that you asked? Or that you violated his copyright?

And FTR, I searched his site and saw NO qualifications, other than some crappy, home-produced eBooks that he's schilling. Not a single credential. Not a single "atta-boy" that he's received.

So what gives????

Message Edited by Wonderin on 07-30-2008 06:25 PM

[WhirledPeasPlease]

Wonderin -- I've removed the text of the article that was posted earlier.

Just a friendly reminder to everyone to keep it...  well, friendly.

Thanks!

-Peas

[Anonymous]

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@WhirledPeasPlease wrote:

Wonderin -- I've removed the text of the article that was posted earlier.

Just a friendly reminder to everyone to keep it...  well, friendly.

Thanks!

-Peas

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I'm sorry, Peas ... I think I may be wearing my Cranky Pants again, today.

We've had a lot of issues 'round here in my tiny burg about the whole foreclosure thing (we're in a SERIOUSLY declining market *sigh*) that I just couldn't take any more "Doomy Dougs."

Yeesh. Some days (and this is NOT attacking or referencing the poster), I swear that I think that as a species, if we're not screaming or fussing about something, we're just not happy! :/

Anywho, I'll behave here on out. I promise.

(If you want me to edit my posts, PLEASE let me know!!!! I think another brain and set of eyes might help me get my perspective fixed if it's outta whack!)

[Anonymous]

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Wonderin wrote:

My point is that SO many people are panicking over this. What good does that do? None. What HARM does it do? LOTS.

I go back to my earlier post where I called people, on a whole, a bunch of dumb, panicky animals (or fundamentally insane, if you prefer). If you have enough people screaming over a situation and predicting the Apocalypse, you're going to HAVE an Apocalypse.

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I agree.  But that's part of what's broken in our economic system, which allows "perceived value" to have such a big role, instead of "actual value."   In my opinion, we've graduated from a world in which your worth and assets were measured in what you could (literally) afford.  Negative perceptions drive conservative behavior (or risky and panicked behavior), which drives down the markets.

There was a great quote recently - I have to find it - which pointed out that companies in the U.S. have figured out that there's more money in having a customer that's a source of perpetual revenue.  So we've fundamentally switched to a debt- and subscription-driven economy.  You don't buy, you borrow.  You don't "own" something - you lease a product or service.  That's inherently a risky model, and we can see it collapsing in some sectors. 

It still remains ironic that the people who are the greatest risk (naturally) pay higher interest rates.  The people who are least likely to afford payments end up paying the most.  Look at the obscene interest rates.  Now there are proposals to cap them at 36 percent.  The worst offenders are the "payday" lenders.  I'm a big supporter of personal responsibility, but it's very easy for people to think they can get ahead of their payments, only to fail. 

That sounds like a pretty bad and risky model to me.   Of course they're going to default!

I had a relative who used to make fun of his brother, who - after loaning the relative money - would say, "how do you sleep at night, knowing that you owe me money?"  And the relative's response was, "I sleep fine.  How do YOU sleep, knowing that I owe you money?"

Eventually, someone gets left holding the bag.  

Message Edited by FICOScott on 07-30-2008 06:44 PM