Wikinvest Wire

The end of an era

Tuesday, April 21, 2009

Among the many other sad, interesting, and inspiring developments over the last week or so, the car that we purchased with the help of that initial wave of home equity money back in 2002 was sold in preparation for our move to Oregon.

It was cause for reflection as so much has changed in those seven years.

Recall that, back in early-2002, the nation was still trying to recover from the effects of the September 11th attacks and short-term interest rates were just below two percent on their way to one and a housing bubble was in its gestation phase, the seeds being sown for the mess that is all around us today.

Home prices were rising, but they had been rising for years.

In the Los Angeles area, starting in about 1998, real estate prices began climbing at a rate of about 10 percent a year which, given the severe downturn earlier in the decade - an overall decline of more than 25 percent from 1991 to 1996 - seemed like a normal sort of rebound.

Having (mostly) unwittingly purchased a house near the bottom in 1995, by the time 2002 rolled around we had oodles of home equity and when the banks started pestering us to refinance or "tap" some of our gains, we went along, hesitantly.

We needed a new car and, between the $15,000 that was just sitting around in a savings account earning a measly two percent and an equal amount that could be quickly "extracted" from our house, it was kind of a "no-brainer".

According to recent sales in the neighborhood at the time, there would be plenty of home equity left over after that withdrawal and, for the first time ever, we began to think of our house as if it was a savings account.

I'm just glad that we never became dependent on that method of financing purchases in the years ahead as so many others did.

After making another equity withdrawal or two to buy some "dumb 'ol gold coins" we soon began thinking about our long term plans and, after refinancing when rates hit rock bottom in 2003, we sold our place and became renters not long thereafter.

I hasten to think what our lives would be like now if we did what so many others did at the time and opted to upgrade our lifestyle by simply repeating this process over and over until the bubble burst.

When we finally did sell our house, we actually felt bad about our loan amount being higher than where it began in 1995 by a few thousand dollars, but knowing that some of that debt was converted into real money at less than $400 an ounce made this a bit easier to take.

It's funny to think about how much the world has changed since 2002.

The seven year old Nissan Maxima shown below was in perfect working order and the only reason we got rid of it is that we need an all-wheel drive vehicle since, wherever we finally end up calling home, we are sure to be driving around in snow during the winter.

Selling it now, before we move, makes that whole process a bit easier and, lest anyone forget, there's no sales tax in Oregon. Coming from a state where you can add 10 percent to the final negotiated price of a new car will make our next purchase, where a simple $200 charge gets tacked on for four years of registration fees, feel like we won the lottery.
IMAGE I remember puffing out my chest a bit when negotiating the purchase price on this great car back in 2002 as the dealership would have to rule out making any money from this transaction via financing - paying cash for a large purchase such as this was something of a milestone for me, even though half of it was borrowed money.

That era has now come to an inglorious end for most people.


Anonymous said...

So what are you going to buy? Please don't say a BMW..... Audi.... maybe, but anything more would take you down a notch or two in my humble eye....

Tim said...

Probably an Acura, maybe an Audi. All wheel drive, a comfortable ride, and decent mileage is a tough combination.

Anonymous said...


When I moved from CA to WA, I noticed everyone drives Subarus. When winter hit, I figured out why. If you have fwd, good tires or chains, and a shovel, you can get just about anywhere. 4wd helps but it is not the cure, nor a must have. Learning how to drive those conditions is. For example, aren't Volvo's mostly rwd? When I lived in the NE, I had no trouble getting around in my rabbit, even managed with it offroad. The real pb with most of the urban NW is snow is infrequent enough that there isn't a regular budget for clearing it. And where they don't clear the roads, the only thing that will get you mobile needs to have tracks.

michael.dufel said...
This comment has been removed by the author.
michael.dufel said...

Dang, no way to edit comments?

I second the comment by anonymous. A front wheel drive with all season tires highly rated for snow should be all you really need for Bend ... unless you live on a hill and have a real burning need to drive around during a snow storm. For what it's worth, I live in a town in the foothills of the Rockies. During one winter, I was forced to park my car at the bottom of the hill and walk up to my house. As I got up to my house, I ran into a 4wd Audi that couldn't make it up the hill either. Probably would have made it had he been a better driver or had all season tires instead of that high performance tread. From my own experience living w/o 4wd and from the wikipedia page on Bend, I would say that you really don't need AWD or 4WD car unless you live in a hilly area. Front wheel drive, good tread, and some practice driving in snow and ice should be sufficient.

Tim said...

Hmmm... food for thought. We have a couple months before we make a decision on what to get.

Dan said...

Cadillac El Dorado.

BRUNO T said...

Get awd. It's better to have it and not need it than the opposite. Will these guys drive over to tow you out if you get stuck?

Most of the time you likely won't need it, but it's invaluable when you do.

If you liked the Maxima because of handling, test drive a Mazda CX-7 or CX-9. They handle better than most suv's but avoid the BMW x5/x3 image thing that might not go over well with the locals in a rural atmosphere. They also have some smoking rebates and deals on leftover '08's.

Anonymous said...

Another vote for the Volkswagen of the Northwest - the Subaru. They don't get particularly good gas mileage, but then none of the AWD/4wd do. But if you are going to have only one car, then I'd vote for something AWD/4wd.

While it's true that AWD or 4wd does not let you violate the laws of physics, give two equally competent drivers a front wheel drive car and an AWD/4wd drive car, and the AWD/4wd car will be able to go places the front wheel drive car can't. The passes over the Cascades are often very icy in the winter (warm wet rain on the west side, cold snow and ice on the east side and the transition is often ugly).

When skiing, the accident on the road coming back is usually an AWD/4wd SUV, simply because the driver assumed some unwarranted degree of invulnerablity (often alcohol-induced). All wheel drive does not help you stop any better. It will, however, help you get started and keep going better than front wheel drive.

In winter I also like the increased ground clearance most AWD/4wd have - in my Mini Cooper S, with its 4.5" of ground clearance, the front bumper/air dam acts like a tiny and very ineffective - and very expensive - German plastic snow plow.

~Mrs. Marku

Tim said...

I got a good chuckle from that "German plastic snow plow" Mrs. Marku...

michael.dufel said...

You know, it sounds like Bend has pretty mild weather, so you might want a highly capable winter vehicle for perhaps 0-10 days out of the year depending on the winter. The real question is if you want to buy a car for the 0-10 days or for the 355-365 other days of the year. My choice would be to buy for the latter and mitigate the former with good tires and possibly chains. But, that's just me.

For what it's worth, I'm selling my Maxima, which is a safer winter vehicle, in favor if keeping my Jeep Wrangler. The wrangler is my 355 day a year choice and I'll just be smarter and drive carefully the other 10 days :)

Anonymous said...

I live in Seattle and keep 2 rwd cars. I considered 4wd but decided the amount of time I might need it was not warranted. During last season's once in 50 yr storm, I got around fine by renting a 4wd once for a short weekend trip and a fwd the second time for a couple weeks. Car rentals are pretty cheap and it is better to let the conditions beat on them instead. If I were to go after a 4wd, I wouldn't go anywhere near Audis. They made them upscale now but the long-term reliability is still VW grade. ToyLexta remains the gold standard no matter what JD Power says this year.

Anonymous said...

Seattle and Bend are two entirely different climates. One of the joys of living in the high desert Ponderosa pine forest is hiking the trails and driving the gravel backroads. Once you leave town and the regularly plowed roads and asphalt, that AWD/4wd comes in very handy.

Crater Lake, about 25 miles north of me (and 3,500' in elevation above me), still has 15' of snow on the roads, as do a lot of the roads around the higher country at Mt. Bachelor, Three Sisters, Paulina/Newberry Crater.

We tend not to buy new cars - the value hit you take when you drive off the dealer lot annoys the crap out of me - and while I've owned used (read: out of warranty) Audis and BMWs, I don't recommend them. The Audis had a tendency toward Multiple Little Thing failure (switches, toggles, blown fuses, broken sunroof cranks, broken door locks), any one of which was not really a serious problem, but the combination of them was seriously annoying. BMWs, with rear wheel drive and equal weight distribution front-to-rear, make great fun summer cars and terrible winter cars.

Bend has a full range of auto dealers, though, and you should be able to find any car your heart desires. I understand that there are used Hummers for sale all over town, very cheap, just now..... (just kidding!)

~ Mrs. Marku, aka Mo.

Christine said...

I have to agree with Mrs. Marku. I live in Oregon and snow level in the mountains is still at about 2500 feet around Portland. My father lives near Roseburg at about 3,000 feet and they had more than a foot of snow several times this year. Plus, when you get into the more rural areas (and Bend is surrounded by them) the roads are often not the best.

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