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"I have a comment. I think you fail to see the damage that you frugal people are doing to the country. There are real people that have it bad with you people sitting on your money. I've sold only 2 houses in the last 11 months and that's common. There are lots of people with money to spend but they are not spending and people are losing their jobs not just in real estate. I get saving money to a point but if you all you do is horde your dollars nobody will have a job! Just my two cents." - Nicole
Nicole, I thank you for the comment and I understand how tough it must be to have a decline in income. Housing has been at the center of the Great Recession and I am sure it must be tough. If our national savings rate was 20%, I'd probably agree that there are people who could step up and move the economy forward. But that's obviously not the case. The reality is that Americans for two decades have increasingly bought everything from houses to Harley's on credit and a massive amount at that. So much so that for a long time, our national savings rate was actually negative. In other words, people spent more than they made and given that there are some savers, some people were spending far more than they made. It felt great while it lasted as everyone from Real Estate brokers to car salespeople saw huge increases in income due to the level of credit fueled sales. But that prosperity was a mirage and eventually, the credit bubble burst. So for some time, we will be working ourselves out of the most massive credit bubble in the history of mankind. So if you are in an industry that is reliant on credit to make sales, such as housing and automobiles, life is going to be really tough.
But your argument that the frugal are somehow to blame is way off base. First off, people can do whatever they want with their money, including saving it. They can also decide that they don't really want material objects. Second, if anything, the frugal and those that have lived cheaply are the ones that are actually propping up the economy right now. I personally know many people that sat on the sidelines when the housing market was going nuts that have recently purchased homes. In addition, many frugal people haven't changed their spending habits one bit during the recession, In fact, they may be spending a bit more because of all the deals that present themselves. So while the figures may not be anywhere near the level of credit-fueled purchases that the housing industry got used to, they are a long way from zero which is what they would be for those that extended themselves too far on credit. What nobody wants to say in America is that the vast majority of people are flat out broke. And broke people shouldn't be buying stuff.
Lastly, there is a sort of entitled tone of your argument that I think is pervasive in America. The fact is that if you are only selling two houses, it says that housing is not a good value, people can't afford it, or they fear they will lose money by purchasing. Assuming, as you say, that people have the money, but are choosing not to spend then I would guess that housing is not perceived as a good value. So prices need to fall to the point where it becomes a good value and then people will buy again. It's painful if that is your livelihood, but I am guessing that you had frothy times from 2004 to 2007.
Reader's: what's your take?
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