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Financial Literacy

Financial Literacy


Banking crisis. Housing Bubble. Those evil bankers on Wall Street. You’ve heard the buzz.

The lowdown:

For a long long long long (long) time, year after year (after year), housing prices generally went up in the United States. Like for centuries. They went up for so long that buyers just sorta counted on them continuing to go up. Helium balloons on a hot day.

Sadly, one day home prices stopped going up. Then they went down. Way down. Those helium balloons stretched and… popped. They must have gotten a little too close to the sun. Guess they had a bit of an Icarus complex.

In some areas like “the sunshine belt” – i.e. Phoenix, Los Angeles, San Diego and thereabouts, many communities saw housing prices cut in HALF during the financial crises in and around 2008, 2009 and beyond.

You may aptly ask, “Why does it matter? I’m not selling my house next week, so if I paid $500,000 for it 4 years ago and today it’s worth $385,000, as long as I’m not selling it for a decade or more, why do I care?”

Well, in fact, you likely don’t care. But the whole process can be and was and is unsettling. If someone tells you that you look like a million bucks, and then a year later they say you only look like about 500k, whether or not you still like what you see in the mirror, you’re going to want to drown your sorrows in ice cream.

In many cases, a home is the largest asset a person has at the end of her working life.

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