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There’s a biblical story about seven abundant years and seven years of famine, and, collectively, we forgot to read it.
We’re all at fault, really. As a nation, we did not invest the profits from the good times in new roads and bridges, or in spending that would have bettered America and created new jobs; instead, we spent them on a disastrous war. As individuals, those of us who profited from the boom (which is pretty much most of us, because even if you’re middle-class and your real wages didn’t grow, chances are that you’ve got a nicer TV than you had eight years ago, and a better phone) did not save for a rainy day the way we should have.
However, that’s all whiskey under the bridge — or as Buckaroo Banzai would say, "Wherever you go, there you are." This is where we are, and the question is: What are we going to do about it?
I think, as citizens, the answer is going to be to save a little bit more of our money. Now we have to be careful, because of course the best thing for the economy this minute is actually consumer demand, and we don’t want to take that away entirely. I don’t think I have to support the service economy single-handedly, but I do figure that waiters and waitresses in my town are feeling the reduction in investment bankers, so I am trying to be punctilious about tipping. But overall, that old-fashioned idea that every year you put away 10 percent or 15 percent of your income for a rainy day — that’s got to come back.
The ever-increasing flow of data does not help us, because uneducated consumers are constantly mistaking information for expertise. I see that over and over again. In my latest crusade, I am constantly reminding consumers, "Don’t just pay attention to list price."
Consumers have figured out how to get a property’s price history now, and they figure it means everything. If a home was priced at $1 million and now it’s $600,000, Internet shoppers figure that it’s 40 percent off — but don’t stop to consider that it might still be overpriced. Maybe it’s truly a $500,000 house, and no one in their right mind should pay $600,000 for it. We can do that kind of valuation work for consumers.
And that work is valuable, and we can get compensated for it, but not if we cede the ground that we are fair judges by urging buyers to grab every house they see. I wrote in my book last year that I thought that selling first-time buyers homes with no money down was "pass the crack," and now we are unfortunately seeing some of the burnout that results. That tactic may have made for a good 2005, or a good 2006, but it’s not making for a good 2008.
A friend of mine was looking to buy a condo in Massachusetts, and his agent pleaded with him to not buy the first thing he saw. He was surprised at her forthrightness, and asked her about it. "Well," she explained, "I think it’s about building relationships. You can have a good year, or you can have a good career."
The good year may look like it’s off the table for a lot of us right now, but there’s no reason to give up on the good career.
Alison Rogers is a licensed salesperson and author of "Diary of a Real Estate Rookie."
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