The markets were fairly subdued ahead of Federal Reserve commentary, which by the way focused on further Fed intervention. Market watchers basically labeled the initiatives as QE4.
Looking at some of today’s movers, we saw shares of Aetna (AET) move higher following the company’s guidance for the year ahead. 3M (MMM) also gave some commentary about 2013, but the stock ended lower following the update. W.W. Grainger (GWW) shares finished lower following the company’s monthly sales update.
On the earnings side, Joy Global (JOY) gained 4% on their latest earnings results, while shares of Costco (COST) ended in the red on their earnings numbers. Finally, bearish commentary had shares of Seagate Technology (STX) and CF Industries (CF) pulling lower by the close.
Will Someone Buy My Home When the Time Comes?
I was in CVS the other day and while waiting on line, I overheard two older gentlemen speaking. Apparently, one of them just closed on a home in an active adult community. The gentleman still owns his previous home, which is on the market but hasn’t sold yet.
The fellow went on to mention how he and his wife took a lot of money out of the home while real estate values were shooting higher, and if it doesn’t sell soon, he will likely try for a short sale with the bank. There was little concern in his voice and I found that a bit unusual, as older folks tend to worry a lot more about their financial situation. Not this guy!
The gentleman had no hesitation about what would happen (his home selling for far less than he paid for it via short sale, with the bank taking a big hit). This conversation got me thinking about others who may be in the same situation: older in age and looking to downsize, as well as taking some chips off the table when it comes to money tied up in their home (as many count their home as their biggest single investment).
I also recently saw a report from the National Association of Realtors showing the median age of first-time home buyers is 31. The median income for the average home buyer is $62,400, slightly above the average mark for older Millennials. In the 1970s, first time buyers averaged 25 years of age, though unfortunately their incomes were not detailed. As much as the media pushes the “American Dream” of owning a home, the financial situation (student debt, other debts, low salaries, etc.) for a good number of younger people is quite sketchy.
As we all assess our financial well-being, it is important to understand the reality of the numbers and not just the message of what the media is hyping. No one knows your financial situation better than you, and therefore you must make decisions based on what your prospects will be in the years ahead, and not what they have been in years past. Having a bit of liquidity to help you make financial decisions is essential if you don’t want your wealth building opportunities capped. The next step is putting your money to work wisely. Sitting in cash or having it tied up in a single family home that may not rise in value (when you include the true cost of home ownership) is not the recipe for building wealth in these current times.
Thanks for reading everybody. I’ll see you tomorrow!
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