Why don't people get it?

I should feel vindicated...but I just feel bad. And I can't quite figure out why. I know this is a long story, but I think its kind of worth reading. Why do I feel bad? This is what I've WANTED to have happen for years.

Late In the summer of 2006, I finally decided I couldn't wait any longer, and it was time to start looking at houses in earnest. I'd been looking casually - open houses, occasional phone calls to realtors, etc.

After the first couple of months of REAL searching, pre-approval in hand - My options in my price range were clear - Small, high maintenance fee 2 bedroom condominiums, or "handyman specials". And when I say handyman, I mean "piping for kitchen/bathrooms exists" It became obvious that unless I got very lucky, or shut my eyes and ignored the 10's of thousands of dollars worth of obvious repairs that were required, I was going to have to downgrade my selection criteria.

Summer of 2007 rolled around, and a new employee was installed in the cubicle directly across from me. This woman is a whip smart developer, mother of 2, with a husband who had in the past owned some small companies, but was currently was a high-payed developer as well.

As I began to despair of finding my "dream" home (hah!) she weighed in with advice. "Buy more than you can afford. Real estate always goes UP!" She said, and more than once. I said, over and over "I know, I know...but it just doesn't FEEL right" - it didn't help that the gulf between condos and even small detached homes was/is nearly $100,000.

So I backed off. I rented a condo that I had considered as a potential purchase option. I am now very sure I can't live in a condo. Its not buying - its renting with an investment component, to me. I pay a rent that is roughly

equal to what the mortgage amount would be if I bought it today. When we started renting, it was valued at 275. Now it is valued at roughly 245.

Fast forward to today. My lease is up in july, and i'm in the final stages of the decision to rent another year and save more of a down-payment. My cubicle-mate mentioned to me yesterday that now is a GREAT time to buy! Prices are SO low! Seems she'd been perusing larger homes for her family, and had found a bargain - 450,000 for a beautiful home. She had the realtor coming by last night to get her the appraisal on her existing townhome, which she was sure would sell quick. Besides, she had a family member that was going to help with the transition if needed.

This morning, her eternal optimism seems to have finally taken a hit. It seems the realtor informed her that the maximum she could probably get for her condo is less than what they owe. At some point during her "real estate always goes up" speeches to me, she refinanced and cashed out, and the mortgage amount she owes is just about dead-even with the purchase price of the new home. Why this didnt dawn on her immediately as a potential issue, I have no idea. But wait - theres more. The 450k bargain? Turns out the guy payed just under 600 for it a couple years back, and refinanced it multiple times - resulting in a total lean of 700,000. The chances that her 450,000 short sale will get accepted by countrywide, the company that owns the mortgage on the new home, seem slimmer and dimmer with each passing moment. Not to mention, the realtor last night told her she expects another 10% drop over the next year in her neighborhood.

I should be dancing around, telling her I told her so, but I just can't. Its sad, sad that people who are so smart can do so many dumb things. Its sad that 6+ months into the correction, with housing being in the news everywhere that the crux of the problem has only hit home now - and even still, she acts confidant that her house will sell at market value quickly. How can I sit there and tell her that even at the reduced price, I wouldn't be willing to touch it. Hell, for nearly 100,000 less I still wouldn't want to touch it, the ridiculous taxes and the fact that its an attached townhome just make it a totally unappealing option, even if it is a huge townhouse, and beautiful - according to her.