[CharlieG]

All of this “help” is based on the idea that people buying from say 2001-2005 were innocent victims.

These buyers screwed me…and a lot of financially responsible readers here, by coming to the auction block with money they didn’t have, and bidding up the prices to insane levels.

Thanks to these bozos, I didn’t buy a house and was forced to sit on the sidelines watching prices go even higher. And even though prices are down to 2004 levels, I wonder if they can roll back to 2000 or so levels and be affordable again–without taking the economy down too.

[CharlieG]

Beyond the normal economic canary-in-the-coalmine vehicle sales indicator, the auto industry is having to come to terms with the frenzied vehicle upsizing scheme they have been working on for the past 15 years.

Nothing says “chump” quite like a temporary paper license plate on an newly purchased SUV these days, and the industry has done a darn good job convincing people that a truck is the only legitimate vehicle for just about any purpose.

Result? Well, no one wants to buy a new truck, and no one quite wants to downsize from a truck…not until their neighbors do anyway. So they are sticking with whatever they have…and dealing with the fuel payment as such.

[CharlieG]

Beyond the normal economic canary-in-the-coalmine vehicle sales indicator, the auto industry is having to come to terms with the frenzied vehicle upsizing scheme they have been working on for the past 15 years.

Nothing says “chump” quite like a temporary paper license plate on an newly purchased SUV these days, and the industry has done a darn good job convincing people that a truck is the only legitimate vehicle for just about any purpose.

Result? Well, no one wants to buy a new truck, and no one quite wants to downsize from a truck…not until their neighbors do anyway. So they are sticking with whatever they have…and dealing with the fuel payment as such.

[CharlieG]

The idea, basically, is how many people would be willing to let of go of the concept of a home as an investment? I would, in a heartbeat. I don’t like the idea of a house being a commodity that fluxuates wildly. I don’t want it as a thing to fund my retirement when the mortgage is paid off. I just want a place to live. If I want investments I’d prefer to look elsewhere. Preferable, in view of today, away from the NASDAQ. 🙂

[CharlieG]

Annoying report for us waiters, sort of like watching scabs cross the picket line, but no worries.

If you recall, the stock market tanked in March of 2001 but there were still plenty of signs of hope until 9/11 delivered the final blow.

This blip, IHMO, represents people who sat on the sidelines briefly because of short-term worries but now think they are bargain hunting. They don’t believe, as we do, that the fundamentals are all wrong.

[CharlieG]

Indeed. We’ve become addicted to homeownership as a pure investment vehicle. And values can never go down, right? A 20% annual gain is assumed; a 20% loss is absolutely inconceivable. Yesterday the New York Times finally used the phrase I’ve been saying for a couple years: pyramid scheme. Ouch.

[CharlieG]

Try to seperate your excellent financial situation (e.g. that you are essentially living well below your means) from your overall asset portfolio.

Add up all your assets, including your house, figure out what percentage you are into RE. If you are uncomfortable with this allocation, you should sell.

A lot of people have no investments other than RE…which happened by default when they kept paying their mortgage but didn’t put a dime into savings.

[CharlieG]

Stu, you nailed it. The current wave of homeowners have a huge sense on entitlement which seems to start at first uptick of values. It reminds me a lot of the posturing in the stock market in late 90’s. It’s easy to feel like a genius when everything you buy goes up, even easier to dispense advise.

[CharlieG]

Some good points made here. I believe that rental demand is somewhat elastic, because people tend to get into roomate situations as the economy worsens and/or rentals tighten. This effect on the bottom end would impact pricing throughout.

An interesting thing to note these days is that my wife and I are renting a much larger house than we intended; for just a few hundred dollars more we are in what feels to us a palace. Our rental is deep into mortgage territory, and like selling a used 2-year old Mercedes, hardly anyone touches this sort of end of the market. Great for us!

[CharlieG]

You raise some interesting points. The housing market has been converted into a giant pyramid scheme, and the people being punished at the bottom don’t realize it quite yet (because they are just getting out of high school and college now).

The lending schemes have helped prop up that very last level of buyers, but it is close to being done now. It is regretable, because this whole thing should have been shut down a couple years ago with less damage. Now it stands to collapse the economy with it.

[CharlieG]

Such an interesting relationship between rents and house prices. In Sacramento, apartments/small homes have been moving up while bigger properties have been flat. It seems that those who cannot afford to buy anything will be forced into higher rents, but it is a rare tenant who can afford to buy but is chosing to pay $2,000/month instead.

I have a very nice 4-bedroom house with 3-car garage for $1,500/month (allegedly “worth” $600k now), but you wouldn’t believe the lousy stuff we were shown at the tenant-competitive $1,200 level. We got three times the quality for that extra $300.

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