Archive for April, 2011
It has been interesting watching the meltdown of the mortgage and housing markets from the sidelines. So the tax deductions, the mortgage driven financial meltdown, and all the associated social costs has given us a higher level of homeownership, right? Not according to Dwight Jaffe. “All of the money and all of the tax benefits and all of the Fannie and Freddie costs … have come to zero in terms of having any observable effects on our home ownership rates,” Jaffee says. “Our rates are the same as countries that have never put a penny of government resources into it.”
In fact owning a home reduces workforce mobility and people’s ability to pursue their careers and dreams. Not to mention that it can wipe out people’s financial planning when the market tanks.
So where did this fetish for owning a home come from? I’d argue that its been good marketing by many parties. The US Government has had a stake in increasing home ownership for at least seventy three years. Fannie Mae was founded in 1938 by the Roosevelt administration during the Great Depression. Sure Home Depot, Lowes, and Best Buy have had their hand in pushing homeownership over the past decade or so, but its the feds that have been pushing this. (Best Buy’s marketing doesn’t show that awesome home theatre system in an apartment, they show it in its own room in a house.)
Successive Presidents including Bush and Obama have done their part to promote and preserve homeownership. But Why? “The Dream of American Homeownership”? This is just a slogan. I’d argue that homeownership might be people’s way to claim a piece of the world as their own. My mother’s habit of remodeling and repainting houses is a testament to this. For some, including my mother, owning a home is a great way to claim a part of the world their own. But for everyone? I don’t think so. So why do we have this fixation with homeownership? Marketing. Anyone who watched television during the 2000s couldn’t have missed the plethora of ads for mortgages, or the flood of home focused television shows on TLC.
But marketing can’t drive us to go spend hundreds upon hundreds of thousands of dollars or can it? NoYes. I had a really interesting term in college where I was taking both a service marketing class, and a philosophy class on desire. Within the space of a week the marketing professor declared that marketing cannot create a desire that people do not have, and the philosophy professor declared that marketing can create desires out of thin air. I think the reality is down the middle. The marketer takes an unmet desire and co-opts it for their own ends. Lets say you have a desire to be comforted emotionally. A marketer can approach this in many ways. Häagen-Dazs for instance would emphasize that they’re a comfort food, whereas a Lazy-Boy would emphasize that their chairs make you feel protected and supported. Houses prey on the need for people to have control, stability, and other things while not delivering on these promises. Stability? Sure as far as having somewhere to live it satisfies this need, but it also pushes people to their financial limits in many cases, and can destabilize their finances if they need to move (for work or other reasons) and the housing market is down. As for control? You gain responsibility for a significant number of variable risks: roofs needing replaced, water heaters, furnaces, the list goes on and on.
I’ve watched the sizes of houses grow and grow. In 1975, the average house size was 1,645 square feet and the average family size was 2.88. By 2005, the average house size was 2,434 square feet and the average household size was 2.6 people. (Sources: Household Size, 2005 household size, 1975 household size.) So as the number of people living in together has declined the size of houses has increased. Why? Bigger houses are more profitable for builders.
So how does this relate to the class warfare that has been going on in our society? The housing market has functioned because there were buyers. This allowed buyers who were reasonably well off to sell their house when it was worth a large amount, and purchase another home with a large amount of equity, and to continue on “flipping” homes, even those which they lived in for a while. When the music stopped those at the bottom of the market were left with homes which were too large, overpriced, and for which they could no longer pay for.
The housing market was supported on the backs of the middle class and poor, but was most beneficial to the rich.
So I did a pretty poor job on my last entry of making my argument.
I’ve decided to take a look at the home I spent a bunch of time growing up in the Dayton Ohio area.
Lets take a peek at it, courtesy Google Street View:
So things to note:
- The sidewalk in the front yard.
- The house is pretty far set back from the street. About 50 feet from the street.
- There is no space to socialize in front of the house. (e.g. there isn’t a porch or somewhere to sit.)
- You can’t see it in this photo, but the road is about three car widths wide.
So lets compare this to the house of my mom’s divorce attorney. This house is in a much newer part of the development, probably about ten years newer. But it is less than a mile from my house above. Again, courtesy Google Street View:
- No sidewalk in the front yard.
- The house is even further set back from the street. About 100 feet from the street.
- There is still no space to socialize in front of the house. Not that you could talk, you’d have to yell, since the next nearest front door is about 200 feet away!
- The road is only two car widths wide, but it is completely unadorned. It is just a strip of asphalt.
One final picture. This one showing the lot sizes and shapes.
So I’ve done some drawing on this. The pink box to the right is my house off of Woodbluff, the pink box to the right is my mom’s lawyer’s house. The red line? Thats showing where the division from the older and newer development. The change in lot sizes is pretty damn dramatic. I lived here for probably a total of eight years, I rode my bike through both of these areas, and it still surprises me.
So I’d argue that this big change hasn’t really done much for the community. Hell, its even hard to have a community when you’ve got a huge piece of grass separating you from everyone. The owners of these houses probably paid more, and I’d argue got less! If you’re buying a home simply because of square footage, and not the community or lack thereof, why? Just like money having square footage of a house is important up to a point, but beyond that it doesn’t do much except show off the fact that you have square footage. If anything its a negative as it costs more to maintain and more to heat.
So, if I had to choose a house to live in instead of a nice condo or something along those lines, I’d like to live in on a street like this one in Seattle:
- Aren’t too big.
- They’re pretty closely spaced, so you can easily talk with your neighbors.
- There is a little bit of space to congregate up front
- They’re close to the road, sparing a big field of grass that doesn’t get used.
- Alas, there is no sidewalk.
- The street width (which you can’t see) is just about two cars wide.
This housing development in Wedgwood in Seattle has a fair chance of developing actual community. Whereas, the neighborhood I lived in Dayton didn’t have as much of a chance and my mom’s lawyer’s house? Well its laughable to even consider the matter?
So this brings me back to the blog’s theme. Communities build resilience and allow for people to network, which further more allows them to eschew having to purchase as many things and push the cogs in the consumerist machine. This manifests itself in situations like when you need to use a pressure sprayer, you’re much more likely to be able to borrow it from someone in your community, the larger and more connected you are, instead of having to buy one for that single use.
By having resilient communities you’re able to do the same with less, lessening the effects of class-stratification, and mitigating the results of class warfare.
A strong community is more important than being wealthy, a community can provide the things that wealth does, and more.