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Let's say caravan has to sell that home she bought in one year due to some catastrophic income loss. Even if she gets what she paid for it (497000), she is still going to be out all of the money it cost to close that mortgage, the maintenance/repairs of the house for one year, the taxes, the fees, the insurance, the extra utility costs, and most costly: her time and effort.
Hmm. I am not convinced that you read my post responding to your OP very carefully--if you had, you would have seen that my husband and I have two YEARS of savings to sustain us if neither of us can get a job during that time--and that's AFTER putting down near 30% on this house--yes, 30%. [And if you think we are just going to let that kind of money sit around in some low-interest CD's, think again.] But regardless of the money factor, we want a nice place to live and raise a family, and we can *afford* a nice place to live--even if we lose our jobs, for two years!
Now if a software engineer can't find a job in two years, like I said, the world economy will be in a hell of a lot more trouble than it is right now. But we were in Iceland when the economy there took the biggest hit of all the countries in the current crisis (read up on it sometime) and the currency fell by 50% to the dollar--imagine how fun that was to see our savings collapse by 50% in value, Zimbabwe-style--yeah, we know what loss is, believe me. And we know how to insulate ourselves against it--we STILL have enough money to buy a 499K home, after all that. We *could* be buying a $700K home with all those savings, but we're buying one WAY below our means, because that is the responsible thing to do. As it is, all of the properties surrounding our home are in the $650-700 range, after remodel; there is so much potential for our home, if we decide to sell (which we may not) in 7-10 years. But right now, we want a place to raise a family, and yes, that's risky and it costs money. That's really quite fine with us. Maybe you're not secure with having a 2-year cushion of savings, but we are.
Hmm. I am not convinced that you read my post responding to your OP very carefully--if you had, you would have seen that my husband and I have two YEARS of savings to sustain us if neither of us can get a job during that time--and that's AFTER putting down near 30% on this house--yes, 30%. [And if you think we are just going to let that kind of money sit around in some low-interest CD's, think again.] But regardless of the money factor, we want a nice place to live and raise a family, and we can *afford* a nice place to live--even if we lose our jobs, for two years!
Now if a software engineer can't find a job in two years, like I said, the world economy will be in a hell of a lot more trouble than it is right now. But we were in Iceland when the economy there took the biggest hit of all the countries in the current crisis (read up on it sometime) and the currency fell by 50% to the dollar--imagine how fun that was to see our savings collapse by 50% in value, Zimbabwe-style--yeah, we know what loss is, believe me. And we know how to insulate ourselves against it--we STILL have enough money to buy a 499K home, after all that. We *could* be buying a $700K home with all those savings, but we're buying one WAY below our means, because that is the responsible thing to do. As it is, all of the properties surrounding our home are in the $650-700 range, after remodel; there is so much potential for our home, if we decide to sell (which we may not) in 7-10 years. But right now, we want a place to raise a family, and yes, that's risky and it costs money. That's really quite fine with us. Maybe you're not secure with having a 2-year cushion of savings, but we are.
This type of first hand experience and education is priceless...and if the government continues to print money and run up the deficit without regard to its detrimental effects on the dollar, you may have a case of 'deja vu' all over again...and probably much sooner than later...
At least you got out of Iceland before McDonald's!
This type of first hand experience and education is priceless...and if the government continues to print money and run up the deficit without regard to its detrimental effects on the dollar, you may have a case of 'deja vu' all over again...and probably much sooner than later...
At least you got out of Iceland before McDonald's!
Well, nothing would surprise us after Iceland. Seriously. That was a country going to hell in a handbasket... well, it still is, as a matter of fact. We got out with what savings we could--thank goodness we didn't buy a house THERE, because our mortgage would have doubled overnight if we had bought it in dollars (which many Icelanders did, thinking mistakenly that buying with foreign currency was a great deal with their overvalued krona). I kind of wonder why it took McD's so long to get out of there, really... they must have been hemorrhaging money for the last 12 months, since the collapse. Lucky for the Icleanders--maybe their general health will increase as a result of American fast-food jumping ship.
If we look at the two situations for "societal good" or "broad economic impact" which is preferable?
Hmm one person chooses to purchase a home and make significant investment in renovations which result in direct employment to the tradespeople as well as the goods need to effect renovations, and the multipler effects of moving all that stuff through the economy.
The other person is content to hunker down and wait for the bottom.
Which is more likely to result in a "lost decade" Japan style?
People often forget that they each players in the economy and their behavior has consequences. If you want your money to grow and things to be better in the future maybe it makes sense to act like it could. I personally see a lot to like in an investor like Warren Buffet that not only takes some big bets, but does it on stuff that he personally likes. He drinks CocaCola, eats Dairy Queen and flies NetJets. The pessimists of the world that skulk about not letting anyone know they are betting a country's currency and trying to consolidate political power in the hands of the easily manipulated "regulators" have George Soros as their not-so-fun-loving idol... Soros Launches Effort to Battle Free-Market Zeal | Newsweek Voices - Michael Hirsh | Newsweek.com
I'm in the process of buying as well... simply for few reason:
1) My location is DC metro area (suburb MD), so the price has come down on the house and if the situation gets worse, it might come down further but I don't think it'll be that much... show me the data otherwise that DC metro price will come down further.
2) I can't imagine u would be getting a jumbo fixed rate at 5% in the future (even though it has gone below that in past)
3) Simply, cause I've a kid and would like to be in a house -- my own house.
To the OP
Large narrow minded generalizations coupled with extreme optimism helped add to the RE misfortunes occurring in this country - now promoting the idea of large narrow minded generalizations coupled with extreme pessimism (not to mention name calling) acting as good advise? Seriously? Taking massive groups of people (ie. home buyers) calling all of them a singular name when you can't justify/prove each and every case is no different than any other form of discrimination IMO. So what is the point of your comments? - to divide those that may otherwise have commonalities? - insult? - discriminate? to justify your own actions (which doesn't require name calling)? - or is it to prove your high level of intelligence? Or to elevate your brilliance above all those millions of home buyers?
Maybe because they have an agenda and an interest if housing prices continue to fall.
Any good news in housing is bad news to some, cheerleaders of doom.
No its not cheerleaders of doom. Its hoping the market finishes its correction from the lunacy of the bubble. Then more people will be able to afford living in a home. That is not being a cheerleader of doom. That is being a rational thinker.
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