The False Hope of Higher Prices

As I write this, oil prices are in wide retreat – this will lead to a drop in fuel costs and gasoline prices, a small but noticeable one.  The stock market is not rejoicing, it is staging a broad and unmerciful sell-off.

We’ve become accustomed to cheering for higher prices for some reason, even when they hurt us.  Retarded.

I had an interesting chat with a PM from BlackRock last night.  He brings up an astounding question, one that I haven’t heard asked anywhere:

“Why do we want home prices to rebound in the first place?”

This is brilliantly insightful from a few different standpoints.  He is a Gen X-er like myself.  He sees the national obsession with getting house values up as merely the Boomers looking to protect their main assets.  He asks why it isn’t a good thing that the X and Y kids like us can buy at depressed prices, giving us more disposable income as a result.

He looks at it like “Since when were higher costs a good thing?”

This is increasingly becoming an Our Economy versus Their Economy story.  Our Economy is just beginning, why shouldn’t we start off with a cheaper house and have that be a positive thing?  “Too bad for those of our parents’ generation who bought high with a stupid loan and even stupider expectations of future gains.”

I am torn.  My friends and a lot of my readers will be the beneficiaries of these depressed home prices.  On the other hand, my clients are the victims of it, having already accumulated their assets.

Are low prices for things like oil and homes bad or are they somehow a blessing?  This question will continue to be answered differently depending on the age of the person you ask.


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