But, what if house prices keep dropping?
Why is it that most people buy when prices are high and run away when prices are low?
BUT, WHAT IF HOUSE PRICES KEEP DROPPING?
Here’s a BUT question I encountered a lot while searching for property in Florida in late 2010. Seemed like the conventional thinking was property prices were going to drop to zero. I remember a particular encounter when this question popped up. It was during a bank visit to see about getting a loan. They wouldn’t talk to me about a loan but they did talk to me about setting up a wire transfer service.
As I started filling out the forms to set up the wire transfer service, the young lady at the desk started up a conversation, “What brings you to Florida?”
“Oh, I’m looking at houses. I’ve never seen such good bargains. I was afraid of missing the window of opportunity but it still looks like there’s plenty of good buys out there.” I answered like an excited kid on his way to Disney World.
I wasn’t expecting her excitement dampening reply.
“I would never buy a house. Never. I bought one before. Thank God I got rid of it; took a big loss. But, I’ll never buy another house again in my life. And, all my friends feel the same way. None of us will ever buy a house again. We’re done. Suckers no more.”
Saying ‘I couldn’t relate’ would be the understatement of the century. It would probably be like me hitting her with the following, “I would never buy a cell phone! Never. I bought one before. Thank God I got rid of it; took a big loss. But, I’ll never buy another cell phone again in my life. All my friends feel the same way. None of us will ever buy a cell phone again. We’re done. Suckers no more.”
She would probably look at me like I just beamed down from an earth orbiting alien star-ship.
Well, I think that’s the look I gave her. When I finally regained my bearings I asked, “Why do you say that?”
Her answer made me believe in aliens.
“Come on. People are getting slaughtered. House prices are tumbling. People owe more than their house is worth. People are walking away from their mortgages. Why would anyone in their right mind buy a…