Sep 26 2007 12:34PM | Permalink | Email this | Comments (1) |
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This past weekend, I got together with a bunch of friends. The group was all young couples in their 30s, most with kids, some not, all college educated with good jobs. In other words, a prime homeownership group. 

Well, if my little focus group is representative of my age group at large, it's scary news for remodelers, builders and anybody else who counts on homeownership as a key to their success.

They all know what I do for a living, so I got an earful.

Simply put, they're not sold on the idea that owning a home makes sense. For all of us growing up, our parents (Baby Boomers) owned homes, but recent troubles in the market have us questioning whether it makes sense. We've all been sold the idea of housing as an investment, but these days it's about as good a place to put your money as Enron.

What's driving this? Situations like mine where we spent thousands on remodeling and still had to sell the house for less than we paid for it. Or where one of us lost $50,000 on a house sold earlier this year. Another person who bought a new home last year and now has the builder selling homes in the neighborhood for $40,000 less than they paid. 

Prices are so screwed up now, it doesn't make sense to buy a house, I was hearing. One friend of mine made the point that he's much better off renting because he can rent a home in his nice neighborhood for half of what it would cost him to pay a mortgage and buy a home there. With things that out of whack, why should he buy? As for remodeling, the response was why put money into something that's going to drop in value? 

And we're in a relatively strong market in Chicago. What are Generation Xers saying in places like Phoenix and San Diego?

My thinking is that it's a short-term problem caused by a lot of negative news coming out in the market. In the end, it'll come down to how long will this downturn lasts. That'll be the biggest factor in how much this erodes confidence in homeownership for future generations.