If My Personal Assets are Worth Less, Am I Worthless Too?

The biggest problem with defining oneself by one's possessions is unfortunately one's possessions. This follows directly behind the old proverb 'be careful what you wish for because you just might get it.' And later wish you hadn't.

This week we learned the median price of a house in Southern California dropped from $500,000 to $325,000 in twelve months. In my county in the Bay Area the median house price dropped from $770,000 to $582,000 in one year. These drops in price have amounted to almost $200,000 per house in one year.

This is a truly disturbing trend. Let's say my net worth drops from $1,000,000 to $600,000. Do I mentally and perceptually have to scale back my self esteem 40%? "I'm less the man I was a year ago by about 40% or $400,000." What a bummer!

That's not the way it's supposed to go. Everyone said "get moving up the housing equity ladder and sooner or later one would either be rich or have a steady refinancing income." Right.

So a lot of folks one sees walking around the streets of Salinas, Stockton and Santa Cruz are only shadows of their former selves because they truly feel they are less than they once were.

Their elevated self opinions have taken a big hit and they just aren't the hot stuff they were some time back. They are not smiling. They are not happy campers. Life is one big bummer.

Five years of equity growth wiped out in one year. And more of the same down the road.

Fortunately misery does love company and we are not seeing mass suicides by the fact that equity loss is the number one group therapy topic in coffee shops and workout gyms in the Bay Area. This and the uncomfortable realization there is no security. The realtor lied. Houses don't always keep going up.

As a reaction to the widespread fraud perpetuated by subprime loan underwriting, lenders are now actually making buyers come up with a down payment and verify income.

As it looks right now, the banks and investment firms will get the bailout and the government and consumer the tab. So if I really want to be crazy I will still try to be caught up in the moment and buy that dream house right in the middle of a declining market. Right. Smart strategy.

That means I will have to wait until the market bottoms out and then starts to rise before I can hope that it eventually gets back to the point at which I signed the mortgage. That could be 3-5 years in some areas and 5-10 years in other areas. Not much of an investment but like the realtor said, ' it's not just a house, it's equity in your very own home.'

"I lost $500, 000," the victim proudly touts, "and it could be worse next year." Right. That's certainly more likely than you admitting that for the past 20 years you have slaved like a beast of burden to increase your personal equity so you could once and for all get rid of your inferiority complex 'middle class feeling'. Right. And just where do you think you will end up?

In fact you get this sinking feeling that if you had it to do over again you wouldn't do it the same way. Going sideways is not only less glamorous but not very unproductive.

But it's always too late to act and once again, depressed and depraved souls will question their reason for being and cling to their guns and rock and roll to lessen the pain. And maybe a bottle of Jack Daniels now and again.

Those that can't afford the ten dollar shots at the Uptown Deco Lounge will be relegated to sipping Wild Turkey in back alleys and church cemeteries. Men will huddle against the cold and wind as they yearn for the days when at least on paper they were worth millions.

Henry David Thoreau said the farmhouse imprisons the farmer so in the end maybe a really good tent isn't so bad after all. As long as it isn't in the snow. Or mud.

Children will someday ask their parents what it felt like to be paper millionaires as mama's and papa's eyes get glassy remembering when high self esteem matched high personal equity.

"Well son, it felt like being a lot more about being whole and a lot less about feeling worthless." The son is bummed. Short term he realizes he is getting royally shafted.

But not to worry, Junior There is always hope. Not much maybe, but some. If we didn't have hope what would we have except a lot of worthless mortgages exceeding assessed value.

Maybe ours is not to reason why but hope things get better so we can get back to doing what we do best and that is building personal equity. Or perhaps the illusion of building personal equity. When that happens our frowns will turn to smiles and things will start to move in the right direction.

So don't be foolish. Just because you have the chance to get out of the rat race and perhaps discover and actuate the real you, doesn't mean you have to. You can continue on the treadmill until another bust comes along and again takes the wind out of your sails. There is no law prohibiting you from being a complete fool. And there is no reason to live a lie, no?

But no matter what you do never buy the argument that you might be happier living a simpler life without the artificial trappings of status and materialism. If enough people begin to feel that way our way of life will be in trouble.

Dios Mio! If that happens imagine everyone will walk around quoting Walden and not arguing about whom has the worst home equity decline...