Economy News Headlines

Today I was looking at cnn.com and I see a headline that says, '20% of homeowners underwater '. In reading the article, it basically sites Zillow.com statistics that say 20% of homeowners owe more on their house than it is worth. Ok, that's a pretty simple and probably fairly accurate statistic. I would say that most people who bought their homes between late 2006 and early 2008 are probably in that boat. However, I have seen an increasing trend toward shock value vs. actual news, and it does bother me.

You could throw out statistics like this all day long. For example, 98% of car owners are underwater! Of course they are, cars are losing proposition from the beginning and most people know that going in. It doesn't , though, because people need their cars to get around. Just like homes! While homes are almost always a person's 'largest asset', they also serve a purpose. Values will start to climb and people will start to see equity again. That's not the important, though. What's important is that a home has a different kind of utility from other assets. You don't sleep inside of your stocks, bonds, or mutual funds. You sleep inside of your house. Once you have had life experiences and created memories, your house becomes your home.

When you look at it this way, it doesn't matter if you are slightly upside down in your house. Like stocks, you haven't actually lost the money unless you sell. If you have no reason to sell, then enjoy the utility your home brings and just wait for the value to return. If you do have to sell, just realize that you are buying in the same market. So while you may lose $30,000 on your house, the people you are buying from are in the same exact boat. Traditionally, I always like to think that if I lose $30,000 and the people I’m buying from would lose $50,000 so I'm actually $20,000 ahead. That's just a side note though.

The moral of my little rant is that the headlines are put out there to sell papers, advertising, or whatever, not to actually give you the news. Just be weary of what you read and just a little critical thinking to read between the lines before you chalk it up to gospel.