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If you were watching the breathless news coverage of the Democratic debate, you probably just saw the flare up between Hillary and Obama that, it seems, took up about 10 minutes of the debate. There were accusations of support/non support of the Iraq war, who praised Ronald Reagan/what was really said, and little blow-darts launched with charges of getting in bed with corrupt campaign donors vs. selling out to Wal-Mart.Â
While that’s all going on, news of the Dow taking a nose dive, the Fed lowering the interest rate, Bush thinking of handing out cash for us to spend, markets around the world also tanking, housing foreclosures, and as Dennis Leary once said: “… and John Denver on Compact Disc!”Â
With all the bad news, the indicators point to dark economic times. However, the NY Times a “Well, it’s not all bad news” story that basically says “Yeah, many sectors of the economy are in rough shape, but you know what? Stocks and real estate have been overpriced for a long time. So a 20-30 percent reduction in prices of both will be painful for some, but may benefit others.” Also, while Wall Street types are popping cherry flavored Maalox antacids over the huge drop stock prices, it seems some Main Street businesses aren’t feeling the economic squeeze. But how this whole thing plays out is anyone’s guess. It’s possible we’ll head into a recession, but the three sectors that seem to have the attention of economic watchers (i.e., Stocks, real estate, and consumer spending) are saying that it could go either way. As prices fall on stocks and real estate, the market may hit a sweet spot where people stop selling and start buying. You’re probably saying “But if people are losing their shirts on foreclosures, stocks, possible layoffs, and banks getting really picky about lending money, where are people going to get money?” Good question.Â
If you’ve been following our real estate woes on this blog or Julie’s you know that buyers in this market have the luxury of waiting because they know there’s plenty of inventory, and if they wait long enough, they will be able to get a good price on a home. But time is one thing, and money another. From our own little, micro, teeny-tiny, experience with buyers in this market, they have money that they’ve either saved, received as a “gift” from a relative, or sold their home before the bubble burst and are living in a rental trying to time the market. I have no hard data to back this up, but I think it’s these groups who are going to benefit from the price reductions.
In the meantime, almost every presidential candidate is trying to make as much political hay out of this downturn as possible. Back in 2000, George W. Bush and his ilk did their best to talk the economy down in an effort to push their economic policies. Now that the Dems are in a similar position, I’ve only heard tepid responses to what could (and I stress could) be a tough economic road ahead.
But if you’re tired of all this talk, and just want listen a cool mix, head over to Popdose for my weekly Mix Six! Ready? Set? Click HERE!
3 thoughts on “Hey, It’s STILL The Economy, Stupid”
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I think people like us will be OK…we got in to the market 10 years ago, and we haven’t refinanced up to the value of the property. So if prices go down, they’ll go down where we want to buy as well, so we’ll be OK. Of course, selling right now didn’t work out for us, but we’re OK there too, since it was only something we wanted to do, not needed to do (Thankfully!).
The people who will feel the pain the most are those who need to get out of the market, or who are selling in a depressed part of the country and moving to an area that didn’t inflate so highly to begin with. Regarding stocks, same thing. People who have to sell, who are pulling money from their 401(k), that kind of thing, they’ll feel the pinch a lot more than those of us who can wait.
And, of course, when this starts translating into lost jobs, plenty of people may start feeling the pain.
Yay mix 6!
We are still holding and waiting. We are considering turning our current place into a rental, but we dread the thought of unknown renters. It would have to be someone we knew, even sort of.
As for all the crap that is going on, we are so bummed that they are raising the conforming loan amounts! That is bad news for us, as it will make it easier for people to refi their crappy ARMs they had no business getting in the first place.
Prices are too out of whack with actual wages, so we will continue to wait. There are no crazy ARMs to be had any more, so without some major help from family, there is no way we could swing it.
I did not watch the debate, but saw the juicy parts on the news. I don’t like to watch people get into verbal battles. So I steer the other way on stuff like this even though it does give you a good idea about each party’s view.