Sacramento Real Estate Blog

Today I took my daughter out to lunch and passed a Sacramento Bee newspaper box, which bore a headline blaming the housing market for a decline in car sales. The idea is that buyers can’t take equity out of their houses any more to buy cars, and now with rising gas prices banks are starting to repossess more gas guzzlers.

Soon after I passed the Bee paper box, I heard the song “Nowhere to Run”, which is how Martha Reeves fits into all this. Here she is on YouTube.

That seemed apt.

The Blame Game

Let’s back up and look at the logic, which if I understand it goes like this: people can’t afford to buy new cars. They can no longer afford to use their houses as piggy banks to buy the cars they can’t afford (which runs on the gas they can’t afford), so the declining housing market is now behind the declining auto sales market.

Am I the only one who looks at that and thinks the logic is utterly surreal?

Here’s the thing: do you make enough money to support you buying and paying for that forty-eight cylinder GMC Suburban or whatever it is you’re driving?

I drive a Honda Accord myself. It’s a four cylinder, with over 100,000 miles on it. It could have a bumper sticker that says: Don’t laugh, it’s paid for.

Don’t worry, though. If you’re a Republican, almost all my agents have bigger cars.

Don’t Tax And Spend, Borrow And Spend

To my naive way of thinking, if you can’t afford to buy a new car, you shouldn’t buy one.

Even more to the point, if a lot of people can’t afford to buy cars without tapping the equity on their homes, and now they can’t do so, to me this begs the question of whether they could afford the car back when they could tap their equity.

The host of the 91st Carnival of Real Estate rejected my article on the relationship between expensive gas, cheap dollars, and the real estate market because of my partisan politics.

That’s OK, I’ll link to him. Liberal, adj. definition 9: “characterized by generosity and willingness to give in large amounts.”

Doublespeak

What always cracks me up about right-wingers is that they characterize Democrats as “tax and spend”, when it’s always the Republicans who have the huge deficits. Their attitude and behavior is “borrow like hell and keep spending anyway”.

Tax and spend actually makes sense. The analog at an individual or household level would be “earn and spend”. That’s what you’re supposed to do.

Am I Saying You Shouldn’t Borrow?

Don’t be silly. Not many people have $150,000 or $300,000 or $1.4 million or what have you lying around to buy a house, so if no one ever borrowed, I’d be out of business. And yes, indeed, I took out a loan for my four cylinder Accord back when it didn’t have 100,000+ miles on it.

I’m just saying this: whether you’re buying a house or a car or dinner on the town, you should ask yourself whether or not the debt you’re using to buy it will get you in over your head. Use some common sense.

On the other hand, if you really need that 72-cylinder Hummer to make your day special and you have to take out your fourth mortgage to do it, let me be the first to congratulate you for making sure the terrorists don’t win. And if you can’t do it now because you spent all your equity on toys, that’s no problem.   You can always blame “the housing market” for putting the cramp in your consumerism.

See, you have somewhere to run, after all.