How Homeownership Has Changed in America And Why You Shouldn't Give Up on Buying
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As Americans moved into the cities and suburbs starting around the turn of the last century, we left the plows, cows and barns behind -- but this deep idea about the intrinsic, enduring value of a piece of turf we could call our own came right along with us. A house is the freedom to do what you want. It's guaranteed shelter and comfort, no matter what the world dishes out. It's a castle you can spend years turning into the private paradise of your dreams. It's the emotional and physical center of gravity for generations of family. It's the matrix of neighborhood connections that builds up over decades, as you look out for each other's houses and watch each other's kids grow. It's capital you can borrow against to fund other investments, like a business of your own or an education for your kid. It's something you pay off in 30 years, so you'll have a free, comfortable, familiar place to live when you retire. If you're really lucky, you'll be blessed to die there, surrounded by your family.
For people who came up in less certain times -- like the panics of the late 1800s, or the Great Depression -- having a home you could count on, come hell or high water, represented a kind of security that was far more valuable than mere money. So people continued to make long-term commitments to their houses. People in the military or who worked for large corporations might be moved around every few years, and sometimes people traded up if their incomes took a real leap. But if you were an average middle-class guy who owned a small business, had a government job, or worked out at the plant, then you could expect that you'd start and end your career right where you were. There was no reason your first house couldn't also be your last.
This is how it happened that so many people in our parents' and grandparents' generations bought a little mid-century modest place in their 20s, and ended up staying there for the rest of their lives. The houses were small -- the average new house size in 1950 was 953 square feet, increasing only to 1,200 by 1960 -- but they were affordable enough that a single paycheck could cover the mortgage with some to spare. (My stepmother still lives in the 1,100-square-foot house my dad bought in 1967.) And the house returned your commitment: its real value was in the quality of the lifetime you got to spend in it, and all the little things you'd done to make it your own. Historically, most generations of Americans have expected to get back out of their houses no more and no less than exactly what they put into them. And even at that, they thought it was still a deal very much worth making.
Financialized markets = expensive houses
The drift away from this view of a home as having an intrinsic value of its own was slow at first. People became more mobile in the decades following World War II, moving to the coasts and the Sunbelt (now made habitable by air conditioning) over the new interstates, and taking jobs with ever-bigger companies that stationed them in offices all over the country. But the shift really gathered force in the late '70s and early '80s, as several developments conspired to pull the rest of those deeply planted American homeowners up by the roots.
Economist Dean Baker of the Center for Economic and Policy Research ticks off several factors that fed the change. "People had a much more 'buy and hold' attitude towards housing in the '50s, '60s, and into the '70s," he told AlterNet. "A lot of things worked to change that. It was much easier when you had a reasonable expectation that you could hold the same job until retirement. Also, when divorce was rarer, it was easier to commit yourself to being in the same house for long periods of time. And there was, on average, no appreciation in excess of inflation (though certain markets had high rates of appreciation), so people in general could not count on making money by flipping homes."