One reason the housing debate gets so emotional is that many people cannot distinguish between where they live and who they are. Their home feels like their self. And how can you put a price on your self? Realtors and lenders exploit this emotion for personal profit, destroying the financial lives of millions.
Others take a more practical view, and are willing to separate their sense of self from where they live. They can and have saved huge amounts of money by renting or owning a house well within their means, and can watch the housing bubble implode with equanimity.
What is it that separates these two kinds of people?
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It is core values that separate these two kinds of people.
One kind is motivated by values centered on relationships and experiences.
The other kind is motivated by values of appearances and materialism.
And that's why the cheating scandal occured at coveted Saratoga High School, and not a place like Andrew Hill High School in East San Jose.
I'm definitely in the second group so I can give a qualified opinion. Sybrib is on to something in saying it is a value decision. There also may be a spectrum with the pure selflessness good money management virtue on one end, and then maybe a more selfish need for security on the other end. I have seen both extremes, where renters who should not have been renters refused to buy something. I have a friend in GA whose parents literally have rented the same house for 40 years. Then you can take someone like me, more in the middle who likes not worrying about finances, and enjoys the freedom of being able to eat out, or dart off somewhere, or is more inline with the relationship/experience freedoms that come with living within your means. Part of me is even more logical, trying to work the monthly cost of living down to zero by going one step further and investing in solar electric systems, and buying a Prius. Then beyond myself, I know people who really optimize the balance, they will live slightly closer to their means because they value a specific neighborhood or want a specific school district whatever the reason. Instead of putting the value on personal freedom and flexibility the value decision factors like the child's future career, or the view, or the really short commute to work.
Beyond that, then we end up at the individuals we all know so well, who will do anything to put up the appearance of being successful even at the cost of their long term financial health, or the individual who is just conditioned to want the perceived best of everything, or the just can't say no types.
Excellent question. Not sure I have any answers?
I may be dating myself but I was brought up to believe you are defined by what you do. Don't get me wrong, (this isn't some high minded ideal) it's more practical than that. Meet;
Hank "the plumber"
Bernie "the aluminum siding guy"
Burt "the guy to call if you got "tax problems"
Every one of my dad's friends I recall as a kid absolutely INSISTED that their vocation be in some way tied to their name! Hey, (it was like free advertising!) Where they lived (or who they were doin' it with) was of no consequence. All you need to know is if you need a landscaper on short notice you call Jimmy "the mower guy"! Having problems collecting on a bill? We all knew who the right guy to call for the job. Any time, day or night. Don't even think about going to someone else! (They're all thieves)
Jack may have been a middle aged alcoholic that still lived with his mother, BUT.. if you had... to beat a speeding ticket, just let Tony know. (Tony ALWAYS knows how to get a hold of him)
When people such as myself or even Randy H have clients that insist on knowing WHERE you live or whether you "rent or OWN" you've just gotta straighten 'em out! Typically clients that base their business decisions on what area you live (or if you still live w/mom) become problems down the road. Besides, you want me to fix this thing wit da' judge or not!?
According to this Wall Street Journal report($), Senator Charles Schumer's proposed expansion of the loan limits for Fannie Mae and Freddie Mac would put the maximum loan amounts for "affordable housing" at up to $625,000.
"This is what Fannie and Freddie were designed for," the New York Democrat said. "To have the public purpose and use private-sector knowledge and dollars."
Mr. Schumer's bill would raise the portfolio caps at each company by at least 10% for one year, while requiring Fannie and Freddie to devote half of that increase -- roughly $73 billion combined -- to helping borrowers with certain high-risk adjustable-rate mortgages refinance into more-affordable products.
Because of past accounting problems, Fannie and Freddie aren't allowed to expand their portfolios beyond strict limits set by their regulator, the Office of Federal Housing Enterprise Oversight, until they finish overhauling internal controls. Fannie's portfolio is capped at $727 billion, and Freddie's at $728 billion, though Freddie Mac can increase its portfolio 2% a year.
Mr. Schumer's bill would also allow the companies for one year to purchase loans of as much as $625,000 in high-cost areas. Currently, they aren't allowed to purchase mortgages above $417,00. Democrats have argued that Fannie and Freddie should be allowed to purchase more-expensive mortgages to provide liquidity to a broader group of housing markets.
"One reason the housing debate gets so emotional is that many people cannot distinguish between where they live and who they are."
So true. But that concept applies not only to where people live, but what they drive, wear, or even where they eat. Without the linking of self/status to posessions, we would not have "exclusive" anything, just a direct line correlation between price and quality. Nobody would be interested in paying a premium for 'vettes, anything "designer", or exclusive zip codes.
Even the term "homeowner" is tied to enhanced self worth, true even if the "owned" part is a very small (or even negative).
"Democrats have argued that Fannie and Freddie should be allowed to purchase more-expensive mortgages to provide liquidity to a broader group of housing markets."
I presume that by "liquidity" ol' Chuckie means "keep house prices high."
They are actually the same thing. Thinking that one is better than the other will only block you success to both.
Selflessness is over-rated. It is so much in contrary to human nature that pursuing such will lead to failures.
We should create a system in which selfishness leans to the greatest good. This system is called capitalism.
"Paging Different Sean, paging Different Sean...
You are urgently needed for a debate on human nature and socio-economic relationships with Peter P. Please log on to Patrick.net as soon as possible."
Can't fight human nature... ;)
"We should create a system in which selfishness leans to the greatest good. This system is called capitalism.
True, but it is "marketing" that plays off the emotional attachments between people and posessions.
How else would you sell beer and smokes without using babes?
True, but it is â€œmarketingâ€ that plays off the emotional attachments between people and posessions.
So we know what we need in order to sell anything. Human emotion is a powerful leverage.
"So we know what we need in order to sell anything. Human emotion is a powerful leverage."
Yes, especialy men. Just show how your product can enhance his status among other men (big screen TV, sports cars, prestigeous house), or help him get laid (sports cars again, Aqua Velva, Old Spice, fine wine, fashion).
Sell to women by showing how your product will enhance their physical appeal.
Peter P is 100% correct. A system that encourages personal responsibility and minimizes government interference would eliminate such huge bubbles and fiascos. There will still be smaller booms and busts because of human nature but only those who speculate will get hurt, which is fair.
All the noise that the government is making about bail-outs is making me nervous.
The government is only there for the noise. Don't worry. ;)
If people are so attached to their homes psychologically, why is it they seem (anecdotally at least) to be staying in their homes shorter and shorter time periods? How many homes on the market in the Bay Area, and probably nationally, were sold as little as 2-3 years ago?
No, I think the psychological attachment thing only goes so far. Most of the reluctance to lower prices is just plain greed. The mentality is still, "my neighbor sold for $X last year - so I should be able to get $X + 10%. There's pride at not being a sucka, and there's fear that you in actuality are the bag holder.
As "Indecent Proposal" showed, there's a price for everything! ;)
Great pics! I see the reason for the camera obsession. I would post the link on this thread so folks can see.
Astrid's pictures are really nice. Perhaps she can sell some high-res prints. :)
Peter P and Skibum,
Thanks! My boyfriend took most of these, so I'll definitely pass the compliments to him.
The Iceland pictures are at http://picasaweb.google.com/dazrulz/Iceland. I did the photo editing in a hurry, so these pictures are a bit rough (too much sharpening and contrast). If you like any of these pictures, leave me a note underneath the picture you like and I'll upload the full size file for the picture.
Exactly. If there's any "attachment" (at any level) it's in the process of being constantly on the prowl, looking for deals, shopping for floor coverings and getting your check. Oh and ENDLESS shopping!
I've lost track of how many people I know that are on like their 3rd home in six years? But... but.. I thought you guys LOVED that last place? "Well... uh.. yeah we did, but this place is a lot closer to Binky's work".
Oh really, if it's "closer" at all it would be by about two blocks and you conveniently neglected to mention that your new "fling" is about a thousand sq. ft. bigger? Now "the process" starts anew with sparkling fresh appliances, window treatments and ceiling fans etc. to doll it up for your next "rung" on the property ladder. I can count the number of people that have stayed in the same home for the last 10 years on ONE HAND!
Way cool pix! With all that natural beauty it just makes the debate about stainless appliances all the more futile. Where are all the people? Or WAS that all... the people?
. I can count the number of people that have stayed in the same home for the last 10 years on ONE HAND!
Weird. I've always thought the stat "People move an average of every 6 years" was just NAR bunk to make it ok for people to buy and sell homes constantly.
I always assumed the average was dragged down due to JBR like me.
But maybe I'm wrong.
Nice pics Astrid...
Which camera did you use ?
SF Bay Area ShortSaleOMeter edged up to 92 listings for Sept.7&8. Still lacking many listings in prime areas, but the noose is tightening. I was starting to "loose" all hope and then the Chronicle printed this nice article about a foreclosure specialist at ground zero in the Bay Area.
She went from a single-person operation to a staff of seven. She went from having four to six listings a year to sometimes getting a dozen a week. She's sold 29 properties this year and has 17 in escrow. She works 12 hours a day, almost every day.
Which of course leads to some professional jealousy:
"Other Realtors don't understand it," she said. "They look down on you a little bit because your properties are so (shabby) compared to theirs. They say, 'The carpets need cleaning, you should paint, you should put in new blinds.' Well, you should, but the banks often don't want to pay for that. This takes a different sort of mentality."
The properties also illustrate how quickly prices skyrocketed and then collapsed. One five-bedroom Brentwood home was purchased about three years ago for $850,000 and appraised at $1 million within a year of that. "Now I'm having a hard time getting it sold at $650,000," she said.
beautiful pictures and a stunningly beautiful place. I may have to take the family there next summer. thanks for sharing.
beautiful photos. May I ask what camera and lens you use to shoot some of the water scenes?
I honestly don't think selflessness is the right word here. It is all about discipline.
A person who is frugal is NOT selfless, in fact, he is doing it all for himself for the accumulation of wealth. Unless he plans to donate his savings, I see no selfless act in such a maneuver. The only difference between a saver and a debt consumer is, the saver plans to amass a bigger fortune so that he can go on a spending spree later, and he is merely delaying his gratification.
The fact that there are so many obese credit card slaves in this country indicates that generally speaking, Americans have NO discipline.
SF Bay Area ShortSaleOMeter edged up to 92 listings for Sept.7&8. Still lacking many listings in prime areas, but the noose is tightening. I was starting to â€œlooseâ€ all hope and then the Chronicle printed this nice article about a foreclosure speci@l1st at ground zero in the Bay Area.
She went from a single-person operation to a staff of seven. She went from having four to six listings a year to sometimes getting a dozen a week. Sheâ€™s sold 29 properties this year and has 17 in escrow. She works 12 hours a day, almost every day.
Which of course leads to some professional jealousy:
â€œOther Realtors donâ€™t understand it,â€ she said. â€œThey look down on you a little bit because your properties are so (shabby) compared to theirs. They say, â€˜The carpets need cleaning, you should paint, you should put in new blinds.â€™ Well, you should, but the banks often donâ€™t want to pay for that. This takes a different sort of mentality.â€
The properties also illustrate how quickly prices skyrocketed and then collapsed. One five-bedroom Brentwood home was purchased about three years ago for $850,000 and appraised at $1 million within a year of that. â€œNow Iâ€™m having a hard time getting it sold at $650,000,â€ she said.
Or in my example, that person may actually be a coward, afraid to move out or change his situation. It is in my opinion a classic mean between extremes philosophical question. The selfish me me me types who spend what they don't have are easily identified, and are not even relevant; the question is really, what are the profiles and motivations for the other group which seperates them from the wreckless half.
(Loved the "Profit=Purchase Price-Selling Price+Tax Benefits"!)
Even at 7 years (NAR BS) that would imply about 6 or 7 homes in the avg. person's lifetime. I figure for all practical purposes it should be 3.
1. Fixer upper/starter/dump
2. Upgrade/trophy home
3. I'll leave feet first when they haul me outta' here home
Granted, not everyone will fit neatly into this mold w/ job/career changes but at the height of the boom I had friends that were itching for the 24 months to pass quickly! It seemed like they were in fact planning their next move as soon as they got moved in! Hopefully that will come to enough of a halt so you'll actually get to meet your neighbors before they move on?
My cousin and his wife go to Iceland every summer and I always wondered why. I always thought of Iceland as a big rock with a lot of snow and ice. Now I can see that it is a really pretty big rock with a lot of snow and ice! They do always insist that the people are the reason for their return... Thanks for sharing!
Tales of the crash of 2007
The meltdown in housing prices may not cause a recession, but it's costing some people their homes - and some their marriages, Ben Stein writes in Fortune.
By Ben Stein, Fortune
September 10 2007: 1:07 PM EDT
(Fortune Magazine) -- It doesn't look to me as if there will be a recession - at least not a major recession - from the subprime problems or the credit crunch or any of that panic on Wall Street. But there are effects rippling all over the place right here and now, and some of them are not what you might expect (though some are).
Item: My dear friend B is a broker for super-luxury homes in Scottsdale. He used to be perpetually out of breath from hustling around that lush area showing immense houses and depositing huge checks.
"Now," he says, "I go into the office on Saturdays and Sundays, and I'm literally the only person there. There are dozens of empty cubicles, but their phones never ring. Never. Not once all weekend. It's as if I were down in the desert 100 miles from here. That's how quiet it is."
"Why do you bother going in at all?" I ask.
"If I don't," he says, "there's a 100% chance nothing will happen. At least here by the phone, there's a chance."
Item: I, your humble servant, am negotiating to buy a condo in Sandpoint in magnificent, super-beautiful northern Idaho. The day I made my first offer, I read a piece in the New York Times that seemed to say that jumbo loans were either unavailable or available only at rates in the range of 13%.
That same day my mortgage broker offered me a 30-year jumbo at 6 7/8%. She said she had money to lend and could do the thing in two weeks. The next day two more lenders called and offered me the same deal. Don't believe everything you read in the papers.
Item: On CNBC there is story after story about the mortgage cutoff and credit crunch. In between are ads for mortgages.
Item: One of my best friends, a blue-eyed, red-haired stunner and a math whiz, is married to a builder and mortgage broker near Naples, Fla. She flew into town, and I had lunch with her today. "How is your husband taking all this stuff?" I asked her.
"He doesn't sleep. At most he sleeps from 5 A.M. to 7 A.M. We built two spec homes near Naples. We spent $2.7 million on each of them. We had them listed for $4 million each. We haven't had one prospect in a year. We lowered the price by a million each. Still no prospects. We're losing $60,000 a month on the two of them. My husband has no business. None. The phone never rings."
"Horrible," I said.
"I'm leaving him," she said. "He's grouchy all the time. I want a guy who's rich and cheerful all day and all night. Why should I have to suffer because his business is bad?"
"He's your husband," I said. "You have to stick by him."
"Why? I want to laugh and have fun, and he's in a bad mood for months on end. I didn't make this mortgage mess, and I don't see why I should have to suffer for it."
"It won't last," I said. "It never does."
She suddenly looked much more upbeat. "How long until the market turns around?" she asked expectantly.
"Maybe six years," I said.
She looked staggered. "That's it," she sighed. "I want you to start looking for a rich husband for me who's going to stay rich no matter what. Tell him I'll be a really great wife." (She has a killer sense of humor so I am praying she's kidding.)
Twenty-four hours later, as I was driving to Malibu from Beverly Hills, I was called by a woman friend of 37 years who is a psychologist and marriage and family counselor in a suburb of Philadelphia. I told her the story about my friend who's planning to look for a richer husband. She gasped.
"That could be a disaster," she said firmly.
"Because she's breaking up her family over money?"
"No, because what if she leaves him and the mortgage market and the spec home market suddenly turn around and he gets rich again and then she can't find anyone as rich to marry next?"
"Good thinking," I said.
"You have to be realistic," she answered.
Most of the pictures were taken with Nikon D80, most of the rest with a Panasonic Lumix with 10X optical magnification. For our Nikons, we took an 18-200mm VR, a 50mm f/1.8, a 70-300mm, a 75-150mm f/3.5 and a 28mm f/2.8. Most of the waterfall shots were taken at 1/10th second to 6 seconds on our Bogen tripod with a small Bogen ballhead.
To a certain degree... I'll agree. I think it was SP that said the more he started looking at his bank/brokerage statements the less appealing consumption looked to him? At my age (late 40's) my consumption peaked sometime back. There really isn't anything out there I want or need that bad.
I certainly don't intend on "splurging" with my ret. a/c just b/c there's an amount in excess of my "critical mass" detector. I don't even want to travel. If you were to drive so far as the grocery store w/ my wife... (you'd understand). Has ANYONE driven a car with a filipina that DIDN'T know how to drive better!? Sheesh.
IMHO, Californians are more wrapped up in the fantasy of how "Great" they are than in other parts of the country. As adults, this manifests in what kind of house you have and what kind of car you drive. How many Californians have you met at parties that talk about their house and car long before they mention what they do, (unless they are in the movie business), or anything else that would define them as a person? It starts at an early age too, when I went to USC you knew who a person's father was and how rich and powerful he is long before you knew their major or what they thought about current events. It was all very alien to a young New England kid on 100% scholarship... Now I just take it for granted.
Exactly. If thereâ€™s any â€œattachmentâ€ (at any level) itâ€™s in the process of being constantly on the prowl, looking for deals, shopping for floor coverings and getting your check. Oh and ENDLESS shopping!
Yes, they are Real American Heroes! (TM)
When people such as myself or even Randy H have clients that insist on knowing WHERE you live or whether you â€œrent or OWNâ€ youâ€™ve just gotta straighten â€˜em out! Typically clients that base their business decisions on what area you live (or if you still live w/mom) become problems down the road. Besides, you want me to fix this thing wit daâ€™ judge or not!?
Actually, I'm working with VCs and boutique investment bankers now and a very surprisingly high number of them, gasp...wait for it, *rent*. Sure, probably 75% of the partners and director types own something, but there are actually a handful of millionaires happily renting, even if they own some investment property somewhere around the world.
I'm finding it's like night and day dealing with the house-or-rent identity crisis. Ironically, it's a much bigger problem with die Hausfrauen at my boy's school than it is with the partners of a private capital firm. And luckily, I don't care much what others think of me, and my wife is among the set of "career moms" who they don't like anyway, regardless of home ownership status.
part of the problem with the people you knew is that you went to USC.
University of Spoiled Children? ;)
To Patrick's OP, I don't think very many people are entirely in either type he described. I think the general norm is for younger adults to tend to be the latter, largely as a practical matter. Over time people tend to be closer to the former. But even house-nester-psychology is bounded, eventually, but financial realities. And most people (not all, clearly) will make nesting sacrifices if they believe it makes them and their family more secure.