In a regular feature, today’s Times’ “Week in Review” included stories about the economy from around the country. One of the stories stood out in my morning perusal, as it was about housing.
In the piece, Marc Fitten, an editor for the The Chattahoochee Review, tells a familiar story about how his home purchase has caused so much trouble. The good thing about this piece, is that he states right away, and in common sensical terms, that he did everything he was supposed to do:
I WAS a good little boy and did everything I was supposed to do. I went to college and graduate school. I took a job with mediocre pay but good stability. I kept my nose to the grindstone, saved a little, avoided credit-card debt and about five or six years ago I took out a low, fixed-rate, 30-year mortgage for a reasonably priced house in the suburbs of Atlanta…
In 2007, when I had the house appraised, we celebrated at having built substantial equity. It was working! We were “amassing wealth” that would one day help pay for my son’s college tuition. We had it all figured out. I put my faith in a proven, tried-and-true, red, white and blue economic miracle.
But then 2008 came and the bottom fell out. America suddenly felt as if it was on the brink of becoming a banana republic. During and after the collapse, my mortgage was sold twice as the companies that held the note went belly up.
Mr. Fitten’s is an effective cautionary tale about the promises built into consumption. Like many industries, the housing industry (real estate, banks) constructs itself as having the interests of buyers and sellers – their clients – as their primary concern. And more often than not, we buy it. But like so many for-profit industries, the housing debacle has laid bare the motives of of these operators. They make promises, build assumptions that fall in line with their own assumptions, and lay out a path for progress that leads directly into their bottom line. And we’re left feeling used.
Often, we are.
The house dealo. I view it differently. My house is an investment into “rent” stability. When I moved to San Diego in 1999, having a child, and cat(s); apartments were hard to find, at least ones in areas my spouse felt comfortable with. We found a place for 890 a month. Decently well kept, generally well behaved fellow renters. After a 6 month lease, rent went up to 1050. “Pets”. Ok. A year later, 1200. Then 1300. Plus, extra for “covered” parking, which took up the majority of parking anyway. So, we followed the above American dream and bought a somewhat average house in a semi nice neighbor hood. My “mortage” was 1700 a month, plus HOA. The purchase price, about 265K. We saw for a while, where value was screamingly high. At one point, we had people looking at houses next to us, in much worse shape (all were leaking in the roof due to age), for 490K. Some bought. We didn’t sell. Now, the house is “worth” 290K. If you add the new roof, fixing a horrible patio, painting the exterior, and a handfull of interior projects, combine that with what we’ve paid, we haven’t “made” money.
But, the intangibles, worth, to me, more than dollars:
7/10 Nieghbors still the same. Great people. My “rent” went down when we refi’d for a better interest rate. In 19 more years, if we pay just what we owe, we “own” it. We can pay more, and pay it off. Apartment rent right now hovers at 1500 for a decent two bedroom in a decent place. A three bedroom, with pets, much more.
Yes, there is the perspective of monetary value, but, just perhaps, if some people bought a “home” rather than an investment, they’d be much happier.
Across the street, a couple walked away from the house because the “value” had gone upside down. They could affoard the mortgage. They liked the neighborhood. But couldn’t stomach the idea of not having potential dollars in the form of the house. I couldn’t relate.