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| Home Front Economy |
| Why car sales are tanking |
| 2008-10-02 |
| Maybe the housing bust - along with the disappearance of home equity lines of credit - has something to do with it. At some point in the past 10 years, lots of people in my part of town went from driving Hondas and Fords to driving brand-new BMWs and Porsches. I like cars, and I pay attention to them. I always wondered how all these folks managed to make enough money to properly afford $60,000 cars. I didn't get to know many of them very well, but the ones I did meet at soccer practice or Little League games seemed to have the kinds of jobs that paid about what I was used to making, or what my wife makes: a solid professional income -- comfortable, but not wealthy. Even though my family has always tended to live below its means, I knew there was no way I'd be comfortable buying a $60,000 car, not even if we threw caution to the wind and splurged. And when you factor in that some of these folks paid considerably more for their houses than we had -- housing prices started rising sharply in our area about 15 minutes after we closed on our house in 1998 -- I eventually started to wonder how they were doing it. Now, I'm starting to figure it out. The secret was in-house We're building a new home, in a community with some friends. We've been working on it for a long time, and we've known for a couple of years that our current house would go on the market this past April. And so it did. Boy, did that turn out to be lousy timing. Within a few weeks of our house hitting the market, five or six other houses in our neighborhood had "FOR SALE" signs out front. We'd never seen anything like it -- very few houses in our area had turned over in the 10 years we'd been there. To be fair, I don't know any of those folks, and I don't know why they all put their houses on the market last spring. But I keep reading stories about people who funded above-their-means lifestyles with home equity, only to get burned when the prices started to fall. I'm starting to see a picture emerging, and it's not a pretty one. By the way, six months later, only one of the houses in the neighborhood has sold -- and it wasn't my beautifully maintained, lushly landscaped, bargain-priced specimen. |
| Posted by:Zhang Fei |