Recession mentality: Tough times can be gratifying for some

    During a recession in the late 1970s, I worked for the J.C. Penney Company in its corporate office in New York City.  I was interviewing a buyer for underwear and socks for an article in the company newspaper.  He told me that, during a recession, the Penney stores loaded up on things like cosmetics and expensive socks (expensive, at least, for socks).  Experience had taught the buyers that, during a recession, people buy more fancy socks, as well as perfume,

than even when times are better.  The logic was simple:  People suffering economic hardship can always afford a bottle of perfume or a pair of $10 socks, and buying them makes them feel better, as if maybe they aren't in such bad shape after all.
    It made a lot of sense to me at the time and, recalling that eureka moment over the last few days, I considered how it might apply to the housing market.  Everything is relative, and for those of us who are hurting but have some disposable cash socked away, this may be a good time to make ourselves feel better.  I wrote the other day about one of our readers who just bought three pieces of property in the North Carolina hills as an investment (which will make him feel a lot better if they appreciate the 20% he expects over the next three years).  He paid around $90,000 for one of them at The Coves, just north of Hickory, NC; not too far down the road, the equivalent-sized lots at The Cliffs Communities or one of the other high-end communities near Asheville with a similar view are priced as much as five times that.
    Developers, especially those offering lots in recently opened communities, are eager to make deals to support their cash flow needs.  The Carolinas are the hottest states in the southeast in terms of population inflows, and cities like Charlotte and Raleigh have held their own in terms of housing values.  When the housing market does regain its footing - our guess here is not before 2010 -- the migrations from north to south, and especially to the Carolinas, will intensify.  For anyone with just a little cash, instant gratification is a small down payment away. 

    Baby boomers on the cusp of retirement might want to consider making a calculated investment now.   That generation - my generation - has always wanted what it wanted when it wanted it.  This would be a good time for developers to target that group with special deals.  Ultimately, it might make everyone feel better.