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Why I’m Not Buying (It)

Warren Buffett said this in a letter to shareholders, about why fewer houses are being purchased right now, but about how the economic recovery in the housing market will take place.

“People may postpone hitching up during uncertain times, but eventually hormones take over. And while ‘doubling-up’ may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure.”

Sovereign Man says about this (tongue-in-cheek):

There you have it: America is going to fornicate its way out of the housing crisis.

I thought it would be good to take a minute and talk about why I’m not buying what the mainstream is dishing up, which may help to explain some of why people aren’t buying homes.

I would have made an excellent employee for a large company.

As with most people living in western societies in the past 50 years, I was told by society to go to school, get a good job, and work for 40 hours/week, for 50 weeks/year, for 40 years of my life at a job that was “good enough”, so that I could “have enough” to pay my mortgage, keep gas in the car, and maybe buy some nice things for my house.

I was also taught by my parents that there are always at least three sides to every story (yours, mine, and the truth), and that there are many ways of doing things.

I realized very early on in my professional career (from the really negative experiences I had working for a corporation that really didn’t care about me, and being a teacher at a school that valued my contribution but told me to fundraise for my own $12/hour “salary”) that 40/50/40 was no longer a reality.

I had suspected this to be the case while watching my well-educated and very hard-working dad go through 7 downsizings in 15 years while I was growing up.

I started seeking out other opportunities from about the time I was 19.

This search has led to a great many challenges, but also truly unique and amazing adventures and opportunities, and a very rewarding life.

“It” (the 40/50/40 picture) no longer exists – at least not for me – and I know this is the same for many people living in western societies today.

The picture is different in India and other developing countries around the world.  Once you get a job with a big company, you are more recognized in society and your job is viewed as a stable pillar in your life.  The difference in developing countries is that those jobs may actually be stable.  In the western world, they’re viewed that way, but it’s more accurate to say:

  • We believe (probably accurately) that we are already paying more into the social security system than we’ll ever see back out of it, and that this trend will continue to become even more difficult as more of the baby boomer generation moves into retirement.  Many people have told me that “they’ve been saying this for years”, as if that’s some sort of explanation of how to fix the problem.  But it seems that no one has an answer for this.  There are too many people taking money out for the number of people paying in.  “Underfunded liability” is something we’ve learned to understand means “More taxes on your generation”.  Also, even if I earn $1500/month from social security, I’ve seen the US Dollar’s purchasing power drop nearly 50% in the last 4 years when valued against real things.
  • We saw our parents work most of their lives at “good enough” jobs to support a system and society which said that you should save up everything for when you retire at 62.5, which is being raised to 65, 67, and later and later in life.  Our parents are enjoying their retirement, but that same kind of retirement won’t be there for us.  Many of us have also learned that the concept of retirement is actually one of the most detrimental things to a person’s health, unless they already have something else going on that they can work on.
  • We see large companies often making decisions which affect millions of people, often negatively, and doing it with only the profit motive in mind, not realizing that the greatest long-term profits come from serving the greatest number of people.
  • We see that there are amazing systems and opportunities and that all you have to do to take advantage of them is take a little leap of faith.  It costs a small amount of money, and a fair amount of faith (at least at first) to have a truly incredible and unique experience.
  • We want change societally, but realize that true change comes from within.  The tools and technology available to us make this change possible every minute of every day.  So we choose to capitalize on that ability and live a life we find rewarding, rather than exclusively following the life that was rewarding for the generation which preceded us (which included buying a house and furnishing it with things).

I can keep going, but in any case… that history (my own history, watching my dad’s experience, and watching my brothers’ corporate experience), as well as the truth of the society I’m living, in is why I’m no longer buying it.

This may sound bitter.

It’s not bitter.  It’s called “just the way it is” (at least from my perspective).

I’m practical and believe in finding productive ways to see what’s going on in the world around me, harnessing my knowledge and ability for the benefit of others, and profiting from that service I provide to others.

This means that I have primary motivations that are more significant and meaningful to me than buying a house.

Disclaimer: Carrie and I own a house which we bought at the height of the housing bubble (joint fault – just didn’t know).  All things considered, we’re currently about $88,000 in the hole for having made that purchase.   We now have wonderful tenants in that house, and we will continue to rent the house out (likely as long as we own it), as that is the only way I see the purchase paying off (speaking strictly in financial terms), short or long-term.

2 thoughts on “Why I’m Not Buying (It)

  1. Adam

    On the other side…very few decisions are done logically (which all of your arguments are). Most are really done emotionally (even by logical people). So…while it might not be logical to buy a house, if you have a child (for instance) and dogs (maybe) then you also probably want a home, probably in a safe neighborhood, with access to good schools/amenities, where you aren’t at the mercy of a landlord whether you get to renew your lease. And…at some point, you might have a second child and need a larger home. The logical thing might be to get rid of the dogs and get an apartment or rent a smaller home or townhome. But…we’re emotional beings.

    Still…I think Warren Buffet is wrong. We have homes for people to live in. Its just that people have to rent instead of own and I think most people are okay with that for now. People won’t just start buying homes because they are sick of living with the in-laws. People will start buying homes because they are able to get good paying jobs. Those jobs won’t come back until we start focusing on policies which make America the best place in the world to do business…like it used to be.

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