In the interest of trainwreck-gazing, let's take a gander at Homebuying Couple #3, shall we?
They're Noel and Mike, of San Carlos, California. Noel's 30 and a hair stylist; Mike's 31 and a crane operator. Their FHA-backed mortgage tallied at $750k. (We're not told their income, but we can infer that it's less than $150k/year since the tax credit starts phasing out at that joint-income level.)
From the article:
We get married in November, but we're moving into the house this month. I'm excited because it's the best entertaining house we've ever seen. The house is built around a courtyard, and there's a barbecue. I love to entertain.
Translation: We're big on appearances. And we like to spend money.
They had to "hurry" to buy the house. They didn't want to "miss out." And they figured out that closing costs and fees would be "high" only when they got "closer to the end."
Anybody else's palms getting sweaty yet?
Translation: We like to spend money. Our wedding planner, realtor, and mortgage broker made a killing on us, which is great for the economy! Right?
Is it just me, or is reading this like eating glass?
What the house next door is "going for" is immaterial, insofar as to whether the Noel/Mike tag team can actually make more than a few years' worth of ~$4,100-per-month payments (not including taxes and insurance) on their newly purchased barbecue-with-a-house-around-it. ($750k minus 3.5% down payment, financed for 30 years at 5.5% = $4,109 P&I monthly payment) I'm sure their realtor, however, highlighted the $1.2 million house next door at every opportunity.
"Aren't these formica shower accents just divine?" she'd observe. "Really, they look just fabulous in this space. You're lucky they're in a house which just happens to be next door to another house — one that's going for one-point-two million! Can you believe it?!"
But who are Noel and Mike gonna believe: me and my silly observations of the recent macroeconomic cratering, or their dashing realtor, who stands to book a sweet five-digit profit from the rushed decisions of two starry-eyed and appearance-conscious newlyweds?
I mean, their realtor's probably perky and outgoing — not a downer, like I am. I'm just a guy with no debt- or bill-payment stress, steadily increasing savings accounts, a mortgage balance that's less than half my annual income, and a positive net worth. Also, I can sleep at night without the aid of pharmaceuticals, which is a bonus.
Although ... I don't have a courtyard.
Maybe that's my problem.
Back to the Noel & Mike show:
Translation: No, really. We like to spend money!
It's at this point, Dear Reader, that I'd like to ask those of you who are praying types to go ahead and include Noel and Mike in your nightly missives. One lost job, one intermediate-term downsizing — heck, one bad ANYTHING — and this couple is sunk.
(Actually, it's the taxpayer who's sunk. But nobody gives a flip about them.)