Traveling through Europe this week…
Let us face facts, the markets are swinging wildly and “panic” seems to be the word I hear all over Spain and now even in Italy. I had a talk on a long taxi drive with the driver in Barcelona and the key point he made was actually inspiring. His comment was that in the old days (he’s talking about the 90’s by the way) young couples like him and his wife could not get mortgages. So what he and his girlfriend did is stayed with their parents and drove taxi and did what they needed to and built up their savings. His parents as well as hers put money aside for them as well, and in eight (8) years they had put enough money to buy a small condo on the outskirts of Barcelona and they purchased it. He paid the equivalent of 46,000 Euros he told me. A couple of years ago they were approached by a real estate agent asking them to sell their place and move into a house. The key was that the condo was now worth over 150,000 Euros and they could put that down to buy a larger home in a better neighborhood.
He said that for some reason they chose not to buy it. Everyone was asking them if they were insane, and he said that it was about time to have children and then they’d buy a house. Today their condo is worth about 70,000 euros and he’s not sure he could sell it if he wanted to.
I told you that story to tell you this clear thinking story he told me next. He said, you know the mortgages caused prices to go up so you ended up making the same payment as you made when you bought a smaller priced home but had to finance it with a large down payment, typically 60% to 70%. So he could not understand why it was a good idea.
Now he owns his taxi and the taxi his wife drives and they don’t owe anything on their condo and know that they get to keep it, no matter what. I take my hat off to him.