I was in the Omaha Airport and saw this most recent issue of Money Magazine and it reminded me of the golden years of 2006-2007. The very years where the media and investment pundits were pushing real estate as the investment vehicle sure to make all of us rich as thieves! You remember these years, when housing values were skyrocketing, construction was rampant, and soccer moms were moonlighting as landlords. Well were back….At least according to Money Magazine!
My question is, what is different in 2013, than was in 2009 after the crisis had seemingly made us all poorer? The fundamentals of the economy are the same or worse. Granted, companies have rehired a bit, but unemployment is still at an unacceptable level of about 8% nationally. More individuals reside on food stamps, welfare, and unemployment insurance, than prior to the crisis. Gas prices have nearly doubled since 2009, as evidenced here. People have less expendable income now, than they did in 2009.
To to answer my rhetorical question, what is different than in 2009. Its perception. Consumer perception and confidence has increased. The election is over, so the contrarians expressing their concerns about the economy are virtually silent. The stock market has hit an all time high, and seems to be sticking around here for a while. Spring is right around the corner, which is typically the best time of year to buy or sell a house. Lastly, folks are at cocktail parties discussing their portfolios and the insanely low rates they just got to refinance their homes. All this is helping drive consumer confidence, but is it superficial? Does the media and our friends in Washington want to make us think that we are doing better financially, so we will keep quiet? Are they wanting to create the mirage of economic excellence, just so we will credit them for having solved the problem? Not so fast, there Barney, you were the one’s who got us in this mess! See here, pay particular attention to his statement made at about 1.36. These are the people creating the playing field by way of Fannie Mae and Freddie Mac, for this to occur!
Not to be Debbie Downer about the economy, as a matter of fact, I am looking at refinancing. I am grateful for the gains I have, but I am simply proceeding with caution. I have liquidated nearly all my positions, the only funds I have left are two Gold Funds, which I plan on holding for the long term. I am looking at moving from a traditional IRA into a self-directed IRA, and hope to buy tax liens, real estate (rental properties) or perhaps cattle. I am leery about the stock market, maybe I lose out on some good moves, but I am ok with that. I would rather invest in something I can see, feel and well, eat (as in the case of cattle). So, if you are looking at buying or selling real estate, now is a good time. I believe the market is heating up, interest rates are low. I would just avoid any pressure to buy more house than you can afford, be prudent, put at least 20 percent down and have your emergency fund, before you buy!
With that said, since today is Monday, I want to mention the posts that had a positive impact on my life. So here is the second addition of Monday Mention Madness!
I had the good fortune of meeting John from Frugal Rules last week, we had a great time discussing the growth of our sites. So thanks John!
I learned a new method of budgeting called Envelope Budgeting through a post by Jose at wisedollar.org. I will put that to good use, thanks Jose!
Debt Roundup wrote a great post regarding his son’s first day of daycare. This hit close to home as I had a similar difficult experience, just 2 years ago. Grayson, I am glad to see that he made it through his first week successfully.
Krantcents wrote a wonderfully honest and insightful post about how to raise successful children. He explained that most of the lessons his children learned were from being around adults, often times by taking them to work with him. I used to go to work with my father as well, which I believe had a positive impact in my life.
Tony from weonlydothisonce.com wrote an informative post on 14 things to do besides watch TV. There are some great ideas in his post, most of which can be enjoyed at no cost!
1500days.com wrote a wonderfully entertaining post about the difficulty our parents have in talking about money. Sex is a conversation they seem to have no problem discussing, but money and earnings…Now that’s taboo!!
Lastly, johnnymoneyseed.com mused that we should live everyday like it was a recession, I wholly agree. I think that we can safely assume that history is destined to repeat itself. Also, those pulling the levers and pushing the economic buttons are sure to make decisions which will win votes, not necessarily help the long term growth of the economy!
Jim, Thanks for the mention! It’s a sad fact that food stamps, welfare and unemployment insurance (hopefully are temporarily) are do hig. the real scary fact is that “when thos that take outnumber those that give” the game is over as far as electing responsible government officials.
Totally agree Jose, I think that is where a party of our government is trying to take us, that way they have a “captive audience”.
I appreciate the mention of my posts Jim. This morning was much easier and that helps me get a better start to the week. I am still very skeptical of where things are going. I think people have just forgotten about it and have just turned back to the ways that got us here. I am trying to be different.
For sure Grayson! I agree about being skeptical, and I too am wanting to be different. I think most people do, just don’t know how to be. Hopefully we can educate! Glad to hear things are getting easier with daycare!
I think the only difference is credit is tougher. Thanks for the links, I am in good company.
That is for sure, thanks Krant!
The market as a whole is overvalued at the moment, but there’s still some value to be found there. It just takes a bit more work.
As for real estate, I think it’s a great time to buy. But I would caution against buying something just because it’s a good time to buy it. Once you own a house (primary or rental) you’re still stuck with the taxes, maintenance, 30 years of mortgage payments, etc, etc.
Good Observation, So many people get caught up in the emotion of buying a home because it is new and “shiny”, once that wears off they still have 30 years of mortgage payments, arrgh!
Love your thoughts Jim! It’s tough to say where the market and the economy as a whole is going, but I think it truly calls us to do our due diligence. There is a growing herd mentality that is bothersome and I think that calls us to have our eyes wide open in terms of what we do for our personal situations. Thanks as well for the shout out! I had a blast and look forward to see where both of our sites go in the long term.
I agree totally John, we need to remain diligent and rely on ourselves, family, and close community. I also had a blast, keep in touch!!
Jim, I totally agree with you here: This reminds me SO much of life in the U.S. before the big crash and the Great Depression. The roaring 20’s was indicative of a seemingly boundless life of frivolity and consumerism. Everyone seems to think that b/c the stock market is doing so well and housing sales are picking up that we’re out of the woods, yet we still are carrying more debt and saving less money than ever, and most of the country seems to be completely ignoring that side of the equation! When the SHTF next time around, it’ll hurt big time.
Laurie, couldn’t have said it any better, great minds think alike!
I am still hoping for a housing double dip since we won’t be able to save enough for a down payment for at least another year or two.
I think you will be ok for another year or so, the politicians need the economy to be ok before the 2014 elections, so they will do everything they can to prop it up!
Not so sure real estate is a good investment anymore. It may be better to rent.
I think there may be some truth to that, hate to say it but renting is not a bad option right now.
Oh man … when I see “housing is back,” all I can think is: Darn, that means the good deals are gone. 🙁
Got that right Paula, I think as long as interest rates stay low there will be good deals to be had, just may have to put a little sweat equity into it. I think the rental market will be great for many years, the american dream of owning a house seems to have gone by the wayside.
Thanks for the mention Jose.