[quote=davelj][quote=CA renter]
When you’re talking about debt used for consumption, all they’ve done is pulled demand forward, and made it more expensive to pay for things. They have done us NO favors by forcing people into debt in order to survive. Those of us who try to live without debt are forced to pay higher prices because we’re competing with idiots who don’t understand that buying a hamburger today for $1.00 means paying $1.25 in the future, while still needing to buy more burgers in the meantime.
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I’m curious. What are you not able to purchase today for what you deem to be a reasonable price that you would like to be able to purchase?
To use the example at the root of this blog, if you’re willing to stay put for several years, buying a house right now, given current interest rates, is quite reasonable. In fact, historically, the monthly cost of owning a house is below the historical median. So, I will assume that housing is not the issue it was for you (and me and most others here at the Pigg) five years ago.
I agree that we have too much debt. But I’d also point out that not all debt is bad and, in fact, a decent portion of it is reasonable give the intended uses. (Although I’ll agree that a lot of consumer debt – particularly revolving credit card and HELOC debt – is not good.) But, when you state that, “They [The Powers that Be?] have done us NO favors by forcing people into debt in order to survive,” this seems more than a bit extreme. Who, exactly, can’t “survive” because they’re unwilling to take on debt?[/quote]
Housing is still overpriced, even though it is more sane than at the peak of the bubble. We still have massive amounts of speculation driving costs, which does not make for a healthy market, IMHO. Oil prices are too high, food prices are too high. HEALTHCARE costs are too high. Education costs are too high.
Just because housing prices are (statistically) in line with historical norms, if today’s economy is more shaky than it was historically, then housing prices should be **below** historical norms. And then there is the risk WRT interest rates and falling asset prices. IMHO, the worst time to buy is when we have low rates. The best thing for our economy would be higher rates, not lower ones.
I’m willing to bet that most people feel less secure in their financial position today than they did in 1995. Our jobs are less stable, and costs are beginning to rise rapidly, with no wage increase in sight to offset them. Pensions have been decimated as well, meaning that people will have to allocate more of their income to savings instead of housing. I do not think that housing prices are anywhere near sustainable over the long run, especially in the higher-mid range and up.
As mentioned before, those without children will feel things very differently than people with families. Our costs are multiplied, so we feel price increases much sooner than those who only have to worry about one person — especially if that one person has an above-average income.
If you were trying to pay for food, healthcare, education/childcare, etc. for a family, transporation costs for two, etc. you’d understand why I’m saying that people are being **forced into debt** in order to survive.
