December 29, 2006

So You Got One -- Now Don't Get Cocky!

THE WALL STREET JOURNAL today had a nice story about renters who eschewed buying property throughout the recent housing boom, and now due to the market’s downturn finally feel vindicated.

However, it is perhaps no surprise to learn many of these people have become insufferable and annoying, and are running around cackling with glee instead of quietly enjoying their triumph. I mean, it’s kind of embarrassing. The way these guys have been carrying on, it’s almost as if they’re about ready to burst into song at the latest drop of bad news: “New home sales are down again! Wrote a song about it! Goes like this!”

Home sales are down and interest rates rising
News of foreclosures are always good tidings
Gloomy cash forecasts and ARM payments that sting --
These are a few of my favorite things!

Now, as one such renter, I must say I’m not a fan of playing I-told-you-so. You see, nearly all the property-owners I know live in parts of the country which haven’t seen a real-estate boom, or they otherwise discuss their gains in hushed tones and with a palpable sense of astonishment. They have not, in other words, acted like many who were merely in the right place at the right time, and then talked about it until the people around them wanted to vomit in the punch bowl.

I’m also not a fan because even though I’m a renter, I don’t want the housing market to crash. You see, if it does, then everyone is going to start looking for apartments again, and I’m going to get squeezed. Also, if the housing market truly does crash, it may very well herald Bad Times Ahead, and that could result in yours truly entering a world of economic pain. As a general rule, I’m not down with economic pain, particularly if it interferes with my supplies of Diet Cherry Coke.

But I’m especially not a fan because many of these renters appear to be getting overconfident in their own abilities to predict the market, and are treating the housing market like a commodity market and not housing, which is kind of its own unique bailiwick. I mean, come on, guys, don’t get cocky just because you got one right. Everyone needs a place to live, after all, and life events can turn renters into buyers and vice-versa.

For instance, one key reason I don’t own a home is because there is no Mrs Kepple, and I've always thought it made sense to buy after I got married and set roots down in a community. Also, when I do eventually buy a home, I might consider the market overvalued at that point in time, but since I’d buy on long-term assumptions, present valuations could very well have relatively little impact on my decision. I just think this is a market that's much more complex than people give it credit for, and that goes for whether prices are headed up or down.

Posted by Benjamin Kepple at December 29, 2006 10:28 PM | TrackBack
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