Attitude is the theme for this economy. We keep hearing about consumer confidence, a measure of attitude.  Depression is a really big attitude and that is exactly what the crash in 1929 created. But this time it’s different. Consider this:

There are about 9 Trillion dollars on the sidelines awaiting a safe investment but making no real returns right now.

The government is selling bonds and printing a lot of money with a falling GDP, so inflation seems inevitable. If we have inflation then the future dollars to pay back loans later will be cheap dollars!
A sensible place to move money is hard assets such as real estate (you can’t live in or rent your stock portfolio). The population continues to grow and people have to live someplace whether they own or rent.

Buying a house now is a great deal if you have some money and/or good credit. Inventory is high, prices have fallen and credit is cheap with money at about 5% on a fixed 30 year loan. Americans are used to a much higher standard of living than in the great depression and soon may grow weary of doing more with less. Sure ‘less is the new more’ but people will still want the real more.

So what is stopping us? It is an attitude of uncertainty. We are uncertain that we have hit bottom and we are uncertain about leadership. Polled likely voters recently gave congress an approval rating of under 10 percent! Without faith in leadership we tend to become frugal, cautious and more uncertain. Locally, in Wyoming, we are less influenced by Washington and can move with somewhat more confidence. Our state economy is still strong and we can be more confident. Still, many of our local incomes are generated by outside sources so we are not immune. We need tourists to come, second home buyers to spend money in shops, restaurants, on services and recreation to fuel this economy a major source is consumers buying second homes. When will they feel confident enough to do so again? They are scared and hurt - somewhat like a person who has lost a loved one, though not so emotional. They will go through stages of recovery and some people will go through those stages faster than others. Some will never feel safe again.

As a nation we are saving more than we used to do and this trend will continue for many years. Savings help build a sense of confidence and that helps defeat uncertainty. One of our best traditional savings places is our homes. Not only do they help us save but we can live in them - unlike an account at the bank. A fixed rate home loan is a fabulous hedge against inflation too.
If you need an attitude adjustment and you want to get rid of that feeling of uncertainty, real estate is still a good option you should consider.

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