housing deflation hurts the economy?

[DataAgent]

“You’re forgetting the psychological aspect of perceived wealth.”

Very well said UCGal.

[CA renter]

Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.

Again, people spending what they don’t have is the **problem.** IMHO, we need to get rid of the notion that some illiquid asset (especially a primary residence) somehow equates to “wealth” (an arbitrary number pulled out of the air, like when a neighbor sells for $XXX,XXX to a buyer who cannot afford the agreed-upon price without a “toxic” mortgage) when it’s not realized.

IMHO, this psychological aspect is what’s so ponzi-like about our economy. Everything depends upon the next person overpaying for an asset using increasing amounts of debt. That is simply not sustainable.

[CA renter]

Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.

Again, people spending what they don’t have is the **problem.** IMHO, we need to get rid of the notion that some illiquid asset (especially a primary residence) somehow equates to “wealth” (an arbitrary number pulled out of the air, like when a neighbor sells for $XXX,XXX to a buyer who cannot afford the agreed-upon price without a “toxic” mortgage) when it’s not realized.

IMHO, this psychological aspect is what’s so ponzi-like about our economy. Everything depends upon the next person overpaying for an asset using increasing amounts of debt. That is simply not sustainable.

[CA renter]

Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.

Again, people spending what they don’t have is the **problem.** IMHO, we need to get rid of the notion that some illiquid asset (especially a primary residence) somehow equates to “wealth” (an arbitrary number pulled out of the air, like when a neighbor sells for $XXX,XXX to a buyer who cannot afford the agreed-upon price without a “toxic” mortgage) when it’s not realized.

IMHO, this psychological aspect is what’s so ponzi-like about our economy. Everything depends upon the next person overpaying for an asset using increasing amounts of debt. That is simply not sustainable.

[CA renter]

Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.

Again, people spending what they don’t have is the **problem.** IMHO, we need to get rid of the notion that some illiquid asset (especially a primary residence) somehow equates to “wealth” (an arbitrary number pulled out of the air, like when a neighbor sells for $XXX,XXX to a buyer who cannot afford the agreed-upon price without a “toxic” mortgage) when it’s not realized.

IMHO, this psychological aspect is what’s so ponzi-like about our economy. Everything depends upon the next person overpaying for an asset using increasing amounts of debt. That is simply not sustainable.

[CA renter]

Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.

Again, people spending what they don’t have is the **problem.** IMHO, we need to get rid of the notion that some illiquid asset (especially a primary residence) somehow equates to “wealth” (an arbitrary number pulled out of the air, like when a neighbor sells for $XXX,XXX to a buyer who cannot afford the agreed-upon price without a “toxic” mortgage) when it’s not realized.

IMHO, this psychological aspect is what’s so ponzi-like about our economy. Everything depends upon the next person overpaying for an asset using increasing amounts of debt. That is simply not sustainable.

[UCGal]

[quote=CA renter]Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.
[/quote]

Yes. And I think we can agree that our economy is not exactly in robust health.

I see so many of my friends/coworkers who spend 100% of what they earn – because their “savings” is in their house. Not smart. but true.

And I try my darndest to live well below my means – but I found myself cutting back even more as the market(s) (housing, stock, job) took a downturn… just in case. Net result for our house – we still managed to save a little even when hubster was fully unemployed. (Vs his current under employed/part time status). Perceptions do change behavior.

[UCGal]

[quote=CA renter]Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.
[/quote]

Yes. And I think we can agree that our economy is not exactly in robust health.

I see so many of my friends/coworkers who spend 100% of what they earn – because their “savings” is in their house. Not smart. but true.

And I try my darndest to live well below my means – but I found myself cutting back even more as the market(s) (housing, stock, job) took a downturn… just in case. Net result for our house – we still managed to save a little even when hubster was fully unemployed. (Vs his current under employed/part time status). Perceptions do change behavior.

[UCGal]

[quote=CA renter]Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.
[/quote]

Yes. And I think we can agree that our economy is not exactly in robust health.

I see so many of my friends/coworkers who spend 100% of what they earn – because their “savings” is in their house. Not smart. but true.

And I try my darndest to live well below my means – but I found myself cutting back even more as the market(s) (housing, stock, job) took a downturn… just in case. Net result for our house – we still managed to save a little even when hubster was fully unemployed. (Vs his current under employed/part time status). Perceptions do change behavior.

[UCGal]

[quote=CA renter]Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.
[/quote]

Yes. And I think we can agree that our economy is not exactly in robust health.

I see so many of my friends/coworkers who spend 100% of what they earn – because their “savings” is in their house. Not smart. but true.

And I try my darndest to live well below my means – but I found myself cutting back even more as the market(s) (housing, stock, job) took a downturn… just in case. Net result for our house – we still managed to save a little even when hubster was fully unemployed. (Vs his current under employed/part time status). Perceptions do change behavior.

[UCGal]

[quote=CA renter]Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.
[/quote]

Yes. And I think we can agree that our economy is not exactly in robust health.

I see so many of my friends/coworkers who spend 100% of what they earn – because their “savings” is in their house. Not smart. but true.

And I try my darndest to live well below my means – but I found myself cutting back even more as the market(s) (housing, stock, job) took a downturn… just in case. Net result for our house – we still managed to save a little even when hubster was fully unemployed. (Vs his current under employed/part time status). Perceptions do change behavior.

[jstoesz]

Thats a good point UCG, I totally agree. Are there other downsides, besides consumer confidence/mood? Some of the confidence drain may be negated by the freeing of cash from housing. Unlike stock market investments, housing assets are pretty much unproductive.

Basically, I am trying to free myself from the guilt of cheering on the fall of home prices without making myself freaked about taking a riskier job. Can I have my cake and eat it too?

[jstoesz]

Thats a good point UCG, I totally agree. Are there other downsides, besides consumer confidence/mood? Some of the confidence drain may be negated by the freeing of cash from housing. Unlike stock market investments, housing assets are pretty much unproductive.

Basically, I am trying to free myself from the guilt of cheering on the fall of home prices without making myself freaked about taking a riskier job. Can I have my cake and eat it too?

[jstoesz]

Thats a good point UCG, I totally agree. Are there other downsides, besides consumer confidence/mood? Some of the confidence drain may be negated by the freeing of cash from housing. Unlike stock market investments, housing assets are pretty much unproductive.

Basically, I am trying to free myself from the guilt of cheering on the fall of home prices without making myself freaked about taking a riskier job. Can I have my cake and eat it too?

[jstoesz]

Thats a good point UCG, I totally agree. Are there other downsides, besides consumer confidence/mood? Some of the confidence drain may be negated by the freeing of cash from housing. Unlike stock market investments, housing assets are pretty much unproductive.

Basically, I am trying to free myself from the guilt of cheering on the fall of home prices without making myself freaked about taking a riskier job. Can I have my cake and eat it too?

[Author]

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