mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Saturday, August 06, 2005

The economy can't be doing well, or I'd be able to afford a house...

King at SCSUScholars is pondering why people feel the economy is doing badly despite the fact that from a statistical standpoint, it's doing really well.

I have one other idea. My econ training is limited, and I haven't stayed at a Holiday Inn Express, but I wonder if the housing boom is one thing that's making people have a negetive perception of the ecomony.

Here's the thing - I'm doing OK financially. I've exceeded goals for saving that I had set a couple years ago. My salary is higher than I thought it would be. But there is one thing financially that I'm not happy with, and that's the fact that I can't afford the house I want.

For first-time homebuyers like myself, who don't have a current house to cash out, buying a house can seem impossible, especially when you live in a city like Baltimore where housing prices have gone up 25% a year the last couple years. I'm going to have to stretch my resources to buy a house, and it's not going to be as nice of a house as I'd like. I've already put it off - I was hoping to buy a couple months ago, but now I'm not even going to start looking until at least January.

It's counterintuative - housing prices are high because interest rates are low, and because people have enough money to bid housing prices up. But they are also up because of the silly financing options like adjustable-payment ARM's that can wind up putting buyers in a losing financial position if prices fall, or even if they don't rise as much as expected. But the perception for someone like me is that I'll never be able to save faster than prices are going up, and that I'll never be able to afford the American dream of home ownership - and that makes the economy seem bad, even when everything else (earnings, savings, job security, investment performance) is pretty good.


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