The director of a recent Independent Lens documentary says in interview that her parents bought a small home in 1963. “They easily got a $15,000 mortgage, they stayed there for over 40 years, the house grew in value and turned into their only and best investment. It financed their retirement and my education. I never would have gone to NYU and become a filmmaker without that house.”
My wife’s parents’ experience was similar. They bought a home in the ‘50s, in what was then the outskirts of Chicago. Over the decades the suburbs engulfed them, making their town desirable to bedroom-commuters. The house, which was comfortable but dated, quintupled in value. Because they had paid it off, the profit on sale seemed spectacular to them, not least because it financed their retirement house in Florida. But as a real measure of the windfall, the new house was prefab, and after 15 years of retirement and some end-of-life medical bills, the remaining spouse died in significant debt.
My mother’s home-ownership experience was not even that. Her little ranch house, in a former coal town, which she got in divorce in the ‘60s, did not appreciate much. Due to the ravages on her life of systemic poverty, the house also deteriorated badly. In the end it was close to worthless. It did not help her in retirement and provided no inheritance.
I went to college because I enlisted in the army, a sort of massive federal bailout of my life—and of many others who did not sign up for patriotism as much as for escape from lack of opportunity. (“In sum, the economic elite are very unlikely to serve in the military,” a study from 2008 says dryly.) And while military service had obvious benefits to me, it was irrevocably disruptive.
I have always thought my hard work, seriousness, and devotion would alter the long story of my family. My children would prove the old American ideal, that each new generation will do better than the one before. But I cannot say my life has been more financially successful than, say, my father’s. He started as the son of a sharecropper, went in the CCC as a teen to support his family, and fought in WWII, but his subsequent long career was stable, and his retirement was decades of upper-middle class ease.
My wife and I have owned two houses along the way, but moving for jobs has prevented much equity. That gurgling noise I heard Monday was not a leaky toilet; it was my retirement fund’s investments going down the tubes with the rest of the economy, and my house, already suffering with a very modern American problem, will likely lose value soon. I am afraid more than ever for my children’s futures.
Home ownership was always supposed to be a big cog in the factory of the American Dream. What is the right metaphor for our current phase of American life? Should we reach back to the Gilded-Age naturalism of Stephen Crane, with traditional ideals actually being cogs in the clockwork universe of the dispassionate god of capitalism:
A man said to the universe:
“Sir, I exist!”
“However,” replied the universe,
“The fact has not created in me
A sense of obligation.”
Or is the right metaphor Tinkerbell economics: viable, sustainable, and somewhat rational, only as long as we truly believe?
Yesterday the New Yorker’s John Cassidy posted an interview with Ian Shepherdson, “the founder of…a firm that advises Wall Street firms, hedge funds, and institutional investors [and the former] chief U.S. economist at the international bank H.S.B.C.,” on the effects of the pandemic on the economy.
Shepherdson said, “It’s going to be catastrophic.” He said 40% of the US GDP is discretionary spending (“things ranging from new clothes and appliances to personal services such as spa sessions, meals in restaurants, and Uber rides”). The swift decline of that spending, due to social distancing and self-quarantine, will have an “enormous” impact, “in terms of both its dollar contribution to the economy and the number of people it employs.”
I already know many young people, especially, who struggle to pay for housing and live check-to-check. Now, with lost income, bankruptcies and foreclosures will mount. My friends and I have been wondering for two decades if owning a house is the investment we have been told to believe in. Many in the next couple of generations are going to discover the truth.