Hello Again

It's been a while since I've been on here, sorry about that. School just started this week and its going pretty good, I like my classes. I'm a few months from turning 27 and I would really like to have my bachelors by the time I turn 30. Jesus I'm a bum (and a Veteran).

So today I was reading a few blogs, and one of my favorites (http://www.zerohedge.com/) just ran a story about how the July totals for homes bought and sold were somewhere around 276K. To put that in perspective, in July of 2005, over 1.4 million homes were bought and sold. I think this really goes to show how far people were reaching for the American dream. The blame for the ungodly high numbers and the ungodly low numbers, respectively, does not fall on any one person or bank or entity. It was definitely a mixture of new financial products available to high risk consumers, a surge in construction of new homes, and ignorance on behalf of the consumer. as soon as companies like Countrywide found new ways to approve taking on the risk of a new sector of the customer base, all they needed were employees to take inbound calls.

And the calls definitely came. People were under the assumption that if you buy a home, it will be worth more than the purchase in future. I remember telling my brother while we were in high school that real estate can be just as risky as the stock market. He told me I was an idiot (I have a strange knack for remembering conversations from the past where I am proven right, and another strange knack for forgetting when I am wrong). I guess the counter to that argument is that when you buy a home, regardless of price, you still have a tangible asset. Or at the very least, a roof over your head. But I would bet if you could ask any of the millions of people who have foreclosed on a home, or are underwater on their loan, if they would still buy the home they did, I would bet that answer would be a resounding "NO". I'm not sure where I'm going with this argument, but it probably just goes to show that when buying a home, there are only a few rules you should go by:

1- Are you buying what you want?

A lot of people bought homes thinking it would be a good investment. Some of them did make money or land a home they wanted. But what you hear now from the news and online is a lot of buyer's regret. You should only buy a home if it is somewhere you want to live, and certainly within a certain distance of somewhere you can find a job. Unless you have the intention and the means to flip the home as a short term investment, think about it a little bit. You can always, and I mean ALWAYS find someone to loan you money. But can you pay it back?

2- Can you afford it?

This goes into the whole "buying a home near work" thing. A common belief a few years ago was that if you buy a home, put a few grand into remodeling it, and then sell it, you can make a nice profit. This has been proven very untrue.

I guess what I'm really working towards with this post is that is that I was right in high school when I told my twin how risky real estate can be. And that buyer beware just doesn't fly in America when a Democrat is in office...