In my years in the business I have seen a lot of ups and downs and have also seen history repeat itself recently. Adjustable rate mortgages were around in the late 70's and by 1981 mortgages reached 17 ½ % and the prime rate hit 21 ½ %. When rates reached this level borrowers were loosing their homes and much was written about why adjustable rate mortgages were so bad and why they would die a deserved death and never be seen again.
Fast forward to 2004/2005 and everyone forgot about the early 80's and adjustable rate mortgages became the means that many used to get into the home of their dreams. It didn't matter what could happen to these rates because we would get the home that we and our families always dreamed of and we would get it now.
I saw another thing happen. In our own community I heard many Realtors, Builders, developers and mortgage lenders make statements like "This (the current real estate market) is going to last for 5 years, 7 years, 10 years, etc. Many Realtors believed this and started buying hummers, boats, vacation homes, sports cars, etc. I even know of young Realtors in their twenties purchasing expensive vehicles with payments as high as $1,100/month and new homes with payments as high as $2,800/month based on the 2005 real estate market. Many of those young Realtors have had creditors knocking on their door and have received demand letters from the IRS.
We will come out of this economic crises many parts of the country are experiencing some day. Our country will climb out of it just like we have climbed out of every challenge we have faced.
I hope when we do climb out of it that someone will carve somewhere on some mountain the importance of learning from history and learning the lesson that Grandpa and Grandma taught us about not buying anything if we either 1) could not pay cash for it or 2) make enough of a down payment to get the monthly payment down to an area where we could comfortably afford it without putting a strain on our financial status and our families.
No market, whatever condition it may be in will ever last forever. The truly "Rich Dads" referenced in the book "Rich Dad, Poor Dad" refers to are all the men and woman that have learned to create cash flows instead of debt and learned to live without in the first few years to have all we could possibly need when we really need it.
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with RE/MAX Advantage, Canyon Counties #1 Brokerage in sales and listings
specializing in Boise Idaho Real Estate and Southwest Idaho Real Estate.
Yes, I remember the 18% interest rates. I was putting a 3200 sq ft addition onto my home at the time...can you even imagine...and they think the rates are high now!
I have a customer from France right now and he thinks 5%-6% is rediculous, I guess borrowing money in France is cheap! Actually from what he tells me, it is!
Karen - My point is that no market will last forever and anyone that creates huge debts based on one or two good years in playing finacial russian rullet
You are so right. It is amazing at what short-term memories we have. It's the old out of site out of mind, and on to the next.
Bill - So true- Thank you.
Marlene - I agree that is a good book...I just hope all realize what is important and what is not.
Doug - I hope many will listen to us.
Randy - So very true my friend
Karen - There is a big value in experience my friend
Missy - I am proud of you for reading the book for the 3rd time and for being prepared.
Diane - Thanks for your kind words and have a wonderful day.
Unfortunately we have become a "instant" society. We don't wait for anything anymore. It's way too easy to ust charge it, or buy into deferred payments, no interest - no payments for XX months, and rent to own stores. The idea of saving money has become a foreign concept to way too many.
But like many things, this too shall pass - hopefully. I am seeing more people that are concerned about how much they will have let if they buy X. This has not been commonly seen too much in the past few years.
Great reminder, George. History does repeat itself - and we should learn each and every time it does.
Hi George,
The people who will learn from this are the ones who are willing to accept personal responsibility for their situation and who are willing to change. Those who believe that this was "done" to them will most likely end up in the same situation over, and over, and over again. There's no reason for them to change, because they believe that it's out of their control.
George: We have some good news today... a reason for the jump in the Dow.
"The National Association of Realtors said sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It marked the first sales increase since last July, but even with the gain sales were still 23.8 percent below where they were a year ago."
Joan - Good job my friend. Have a great day!
Michael - Very true....thanks
Barbara - Good for you and be proud. I have also been accused of having the first penney I ever earned. This is not something to feel bad about in a credit and money hungry society.
Patricia - Some of the truly wealthy people I have met never abuse credit and use it very little. A lesson many could learn. Again, thank you my friend.