Wednesday, December 9, 2009
The impending question I've received from co-workers/friends/family has been "Dude, buy a house, it's a good investment, Houston's housing market is nearly bullet-proof"..
Some co-workers have even tried to psychoanalyze me and relate my decision not to purchase a house as a sign of fear of commitment to a relationship.. this gave me a good laugh because the parallels they drew were uncanny.
Nevertheless people try to provide reasons as to why I should purchase a home. Here's a few:
1) There's an incentive 'bonus' of $8,000 the government is providing to new home purchases, now extended till next year! Hurry up and buy your house before time runs out. A 'stimulus' like this one just plays toward the American habit of buying things in haste because a good deal has been placed on the table. The longer the stimulus is out there, the higher home prices will go up because of the blanket $8k you can incorporate into home purchases. The government's message to the public re the financial crisis last year was citizens should save more, spend less because we were essentially spending money we didn't have. They've cracked down on making loan approvals more difficult, but the incentive only promotes more debt at the cost of the beneficiaries.. if you can call it that. This is just like the Cash for Clunkers program - what a crock. It encourages people to buy something at a time when a lot more people are pressed for cash to begin with
2) Houston's housing market is bullet proof.. it's a good investment! Sure Houston's market went relatively unscathed through the recession, but that's because Houston's housing market is known for being mediocre in terms of any long-term appreciation. Growth rates will stay low single digits and this isn't enough to pay-off all the mortgage rates, property taxes, HOA fees, maintenance, general OCD type of repair work in addition to all the headache. I can only see 2 ways a return will be seen here: 1) Living in the house for a long time (15+ years) 2) Getting lucky with appreciation.
3) Comfort, stability. This just boils down to values.
Sunday, November 29, 2009
I’ve recently begun to shed a lot of my possessions and scale back on ‘upgrading’ technology or indulging in new toys like I used to. Hell, a few of the hobbies I picked up last year (i.e photography) is on the fence of being scrapped as I look to the trusty point and shoot picking up dust in the corner more frequently these days.
Something that brought this to mind is a look at one of my favorite movies, Sideways. It gives a snapshot of the life of a depressed, failed author who indulges in expensive wines and food while maintaining a day job as an 8th grade teacher. As the movie unfolds, it looks at the life of Miles, focusing on his shortcomings as a husband, son, friend and author. Back to that in a flash.
We can’t escape marketing and its intended end product, consumerism. It keeps our economic engine running and for some people, our souls. I will say ‘our’ to prevent isolating myself as an exception since I acknowledge a degree of indulgence as well. My pitfall, for example, is bicycles. I imagine passion is deeply rooted in some of our indulgences to splurge because we truly get enjoyment out of an activity, but upgrading our bicycles for new ones every year, adding $2500 rims, owning 8 bikes and having a custom-built bike for $12,000.. seriously? (These are all true stories BTW of people I know).
Back to the movie. The reason it came up was the beginning of the movie where Miles is sampling the cakes his cheating friend and wife are trying to decide between for their wedding. I’ve asked some people how much wedding cakes typically run and was shocked to hear $600 as ballpark price ($543 according to The Bridal Association of America). This is another WTF thing that makes me shudder. Guests at your wedding will likely not remember the flavor or color of your cake the next day onward, so why the fuss? It’s this type of consumerism and worry over a petty thing as a cake (which doesn’t last) that I fail to understand. Okay if I give the benefit of the doubt maybe the bride and groom are super passionate about cakes and it will be THE cherry on top of the wedding and the fate of the marriage hinges on the difference between chocolate vs vanilla, but let’s be real. When stress is produced over something so small, it’s the epitome of the 2nd Law of Thermodynamics in motion, perpetuated by more nonsense.
I like watching movies which present things at face value like Sideways because the fondness you develop for some TV/movie characters would never manifest in real life if the person existed. Think Dwight Shrute. Miles is this type of character in the movie. His passion for wine does make small cameos, making his character more appealing, but who wants to befriend a depressing, schizophrenic wine snob?
So what's constant? What passions, indulgences, consumerism can be defended as a justifiable purchase? All of them because passions are rooted differently in everyone. When I get off my bike or sip on my favorite beer, am I being a sucker just like the wedding cake example? I'd like to say no - I can get back on my bike and use it for 20+ years or buy beer at a fraction of the cost and know what I'll get in return. In the end, all of it can still be taken from me, so the wedding cake lady may be shaking her head at my $1200 bike purchase as well.
Consumerism will always triumph in a society with too much money and a disproportionate spread of wealth.