I ran into an acquaintance at the store today. We started chatting, and I told her that DW and I spent the whole weekend moving (that is right, we moved to a new rental apartment, $2300 for a beautiful, new 3 bedroom, 2 bath, with washer and dryer hookups, a large patio etc.)
She asked me, all optimistic - "Oh, did you buy something?" My reaction was -" Of course not, in this market". Her answer -"Ah, you are going to wait for it to double again?" ?!?!?!
That just blew my mind, and I did not know what to say. I mean, what is there to say after such a ridiculous statement. And from another educated (engineer) person.
Of course, she and her husband own a house (probably really own, they bought it 20 years ago or so), and as such are disconnected from the reality. I would like to think that if I were in their shoes, I would have sold it last year (both of their kids are in college). But, it is easier to think that you are a paper millionaire, and still rationalize why you need to stay in your house, and how the prices are going to keep increasing. Human psychology is a strange thing - even though you are making these 'paper' gains, the loss to follow will hurt as if you actually lost the money...
Oh, another news is that DC lost yet another bid for another ghetto lair in DC. This would be offer number five. I wonder when their incredible luck will run out, and when one of these offers will go through? We'll see if you get 9 lives in the real estate bubble as well...
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Hey - same in Australia. I am fortunate to be reasonably educated so at work I tend to bump into other 'educated' people. I feel the same way as you. They just can't see it - engineers, geologists, even some Chartered Accountants. Seeing the disaster ahead is so natural for me I can't understand how they don't see it. It baffles me.
I figure it's not a matter of education - it's whether you can think of a situation over multiple stages through time - e.g. I buy this place, it is supposed to go up in value - therefore I wonder where the next buyer will actually get the money? It it that stage 2 thinking process (I wonder ... ) that you either have or you don't. Many don't have it. Anyway - check out my blog - it is new like yours so doesn't get a lot of traffic!
http://dave-davesramblings.blogspot.com/
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