Thursday, December 11, 2008

Famine watch. Also, my story about housing.

2 I have spread out my hands all the day unto a rebellious people, which walketh in a way that was not good, after their own thoughts;
3 A people that provoketh me to anger continually to my face….
6 Behold, it is written before me: I will not keep silence, but will recompense, even recompense into their bosom….
8 ¶ Thus saith the Lord, As the new wine is found in the cluster, and one saith, Destroy it not; for a blessing is in it: so will I do for my servants’ sakes, that I may not destroy them all.
9 And I will bring forth a seed out of Jacob, and out of Judah an inheritor of my mountains: and mine elect shall inherit it, and my servants shall dwell there.
11 ¶ But ye are they that forsake the Lord, that forget my holy mountain….
12 Therefore will I number you to the sword, and ye shall all bow down to the slaughter: because when I called, ye did not answer; when I spake, ye did not hear; but did evil before mine eyes, and did choose that wherein I delighted not.
13 Therefore thus saith the Lord God, Behold, my servants shall eat, but ye shall be hungry: behold, my servants shall drink, but ye shall be thirsty: behold, my servants shall rejoice, but ye shall be ashamed:
14 Behold, my servants shall sing for joy of heart, but ye shall cry for sorrow of heart, and shall howl for vexation of spirit. (Isaiah 65:2-3, 6, 8-9, 11-14)
This is a stiff prophecy of Isaiah’s and I have a feeling it is about to be fulfilled in our day, especially that part in verse 13 about hunger and thirst.

Have you noticed that oil prices have dropped by more than half? Good for us. So far. That’s taking away profit margin from oil companies. And demand has plummeted too. But those dropping prices… if they fall too far, then it becomes unprofitable for companies to remain in business, so they will close operations.

And the credit crisis. (Which I think is really a debt-default crisis causing a trust crisis.) Banks are making it really hard for companies to borrow money for their day-to-day operations. (And I don’t understand why businesses borrow money for the day-to-day expenses. That doesn’t sound like a very self-reliant model.) Banks are also making it hard for companies to borrow money to buy their inventory. (Buying inventory on credit doesn’t sound very smart to me either.) So if fewer people can buy inventory, then there will be less inventory and we will have shortages. When shippers, distributors, and other middlemen in the supply chain become unable to obtain credit to fund day-to-day operations, they will be forced to fold. When this happens to the farmers, food shippers, and grocery stores, we will have famine.

I’ve already read some news about farmers being unable to obtain loans to buy fertilizer. Hope you have your food storage.

And houses. When nobody has money for a down payment, no one is be able to buy a house. And when no one is able to buy, no one is able to sell. And if no one is able to sell, then no one can move between houses. So the price of houses will drop to practically nothing, forcing those who bought at higher prices upside down. Just as businesses walk away from a market when they can’t make a profit, homeowners walk away from a house that puts them in debt for more than it can fetch on the market. Of course, this is all pretty obvious to everyone now.

I remember back in 2004 and 2005 there were a lot of news stories that talked about the immense amount of debt that Americans were carrying. I remember wondering if anyone listened to those stories. They were a warning. I suppose they were easy to ignore; the consequences took several years to work through the whole system, and it is easy to ignore warnings and think they are too “alarmist” when the consequences don’t come immediately.

I suppose you’re wondering what my husband and I did during those boom years. Well, we had our own learning experience a little earlier. We bought a duplex in Austin, Texas a few months before September 11th. Austin was going through its own little real estate bubble at that time and we bought near the top of it. We were just married and we were eager to have our own home to live in. Yeah, we bought. Two mortgages, 80% and 10%, I think it was. And then September 11th happened and the economy tanked. And there was the “Tech Wreck” when technology stocks took a nosedive. Around 2005, we moved to Phoenix and we needed to sell our duplex. By that time Austin’s real estate bubble had popped. Somehow we managed to sell and we just barely broke even. (Talk about a miracle! Boy did we feel blessed that we got out of that!)

And we got to Phoenix just about when its housing bubble was close to the top, right at the time when prices were more than a little insane, right when it was hard to find any house with a For Sale sign in front of it that didn’t say “pending” or “sold”. And prices were much higher than they were in Austin, so.. we rented. We could have bought something out in the boondocks, but we didn’t want to drive for hours everyday to get to work or school. After experiencing the Austin-bubble-poppage, we were not excited about jumping into a repeat performance in Phoenix.

I think that at least one reason so many people bought houses was peer pressure. My husband remembers all the times his co-workers kept telling him, “You really should buy now; prices are only going to go higher. They’re never going to come down. They might stagnate for a while, but historically, home prices never drop.” (Sounds like a sick joke now, doesn't it?) Who knows how many times these conversations were duplicated across the city… or the nation? How many people caved and bought because of this?

We muddled through the pressure of all those flyers that were stuck in our door jamb. ("Why throw your money away when you can buy with no money down?! 6% interest rate! 4% interest rate! 3% interest rate for first 5 years!") We heard the stories about people buying houses and then selling them for an obscene profit a few months later. We read the stories of the people who sold their house in California for half a million and then bought in Arizona and retired. Sighhhhhh.

For a while I worked for a plumbing company in their estimating department. I saw all the house plans for all the new communities they plumbed. I heard about the numbers of houses being built. Do you know how hard it is to keep from buying a house when you are working in the construction industry?! People are always talking about buying or looking and about what options they want. One fellow I worked with liked to change his plumbing fixtures every so often for a new look. I’d wonder, When will it ever be our turn to buy?

Finally, I complained to the Lord about it. And I got a very strong impression that the day would come when we’d be able to get whatever kind of house we wanted for a song and that the Lord was going to squeeze people’s wallets so much that George Washington was going to scream. That gave me the courage to hang on longer.

We rented through the boom. We’ve saved money for a down payment. We’re starting to look at houses now. My husband really wants to buy. He dreams of a house around which he can plant a peach tree and a cara cara orange tree and get loads of fruit. I’d like fruit trees too, but I’m not ready to fully cast off my caution. Waiting through the boom years taught me something very valuable—it’s okay wait and save even when people say it’s crazy.

One thing I’m not sure about is when I’ll know that housing prices in Phoenix have hit “song” level. Actually, you know what I’d consider “song” level? A price so good that we could buy the house outright with no loan needed. Do you think I’m crazy? Maybe I am, maybe I’m not. I've seen the credit crunch squeeze George Washington. (I think it is still squeezing as I write.) "Song" level prices may be just around the corner.


Angie said...

I'm looking forward to exploring your writing. I have always struggled with Isaiah, so maybe you can help open my mind.

Michaela Stephens said...

I'd like to think I can help by explaining, but ultimately it will always be the Lord that will enlighten you.

I do understand the feeling though, which is why I put a chapter in my book totally about how to understand Isaiah better. Chapter 1. It's in the sidebar.