Buyers wary of recession's bottom

Flickr image by The Pocket.

Connoisseur of highbrow culture that I am, last week I watched the Wanda Sykes stand-up comedy special on HBO. Hilarious, if more than a little ribald. Anyhow, she does this bit about how people from every country think their national customs are superior to all others.

Her South American tour guide described a particular bird whose behavior is viewed as a predictor of whether the weather will be the same the next day. Sykes' French wife tried to one-up the tour guide, telling of a bird that, in her native land, is believed to predict rain with its song. Sykes trumped them both, declaring that in America, we have meteorologists who can predict the weather for five days out!

In America, we don't just have meteorologists, we also have economists -- lots of them. Just now, most of them are chiming in to create a chorus declaring that the recession is over. But that's certainly not the feeling in the air among the most natural of all economists -- consumers -- not in my experience at least.

The question that came to my mind as I watched Sykes extol the superiority of professional vs. natural weather indicators was this: Should we take the word of the economists or the pulse of the people in determining whether the recession is over?

In October, the National Association for Business Economics surveyed 43 of the nation's top economists to ascertain their take on where we're at in the timeline of this recession. Some 80 percent -- all but four -- believe the recession is over and the recovery has begun, although all opined that the recovery process will be "slow and painful." Ouch.

Many consumers, on the other hand, aren't nearly so certain or unanimous. People's general view is probably more self-centered than the economists' national perspective. If you or your spouse is out of work, underwater or on mandatory employer-imposed work furloughs right now, chances are slim that you'll agree that we're over the worst of it.

Anecdotally, even my house-hunting clients are not 100 percent certain this recession is behind us. Buying a home is an experience usually characterized by an overwhelming optimism about the future on the part of the homebuyers. My buyer clients these days, while confident that they're buying at a great time, are still very wary -- or perhaps recession-weary -- of making assumptions about their financial future.

There is none of the normal optimism young couples and professionals usually have about their income rising as a matter of course over the next few years. My buyers are buying way below what they qualify for and even often way below what they can afford, based on their own household spending plans. Many two-income couples are buying with the plan to limit their mortgage payment to what they can afford on one income, just in case someone loses a job or gets laid off.

This is worst-case-scenario homebuying. ...CONTINUED

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