Homeownership for whom?
Alex Baca is a Strong Towns member and writer based in Cleveland, Ohio. This article is part of our ongoing conversation on housing, homeownership and affordability issues.
Berkshire Hathaway sponsors podcasts now. I was chopping carrots in my kitchen, listening to It’s Been A Minute With Sam Sanders, when I was hit with what the realization of what the we’ll-be-back-after-the-break ditty was selling: “Support for this podcast and the following message come from Berkshire Hathaway Home Services, whose knowledgeable, high-caliber network agents see a house as more than just an investment. They respect your life and the true meaning of home while guiding you through the emotional journey of buying and selling, and they’ll help you contemplate the deeper questions that are good to ask. Whether you’re ready to buy or sell now, or thinking about it for tomorrow, get to know a Berkshire Hathaway Home Services network agent today.”
Quicken Loans’ Rocket Mortgage, of course, has been hitting the effete liberal radio-centric media with its ads promising discomfitingly quick loan approvals for a few years. And it’s not like Berkshire Hathaway is the first to appeal to the emotional sense of home in service of selling something. But in many ways, I think we live in a relatively new world now: one in which the American dream of generational betterment is functionally dead.
Since generational betterment is notionally and financially tied to homeownership; and since we are losing that; and since the screaming unaffordability crises in coastal locales is what set the tone of the discourse around housing these days, Berkshire Hathaway’s naked play toward an obscured and conceptual version of what home means—in order to sell the selling of property—was nearly chilling.
Who is Homeownership for?
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It made me think about who benefits from homeownership—or, perhaps more frustratingly, who homeownership is even for at this point in time. Marketing executives may or may not be onto something by targeting the kinds of people who listen to NPR podcasts; first-time homebuyers, according to this New York Times piece, are majority white (79 percent), majority married (58 percent), majority childless (60 percent), and make on average $72,000 per year. They buy single-family houses. They’re also only 35 percent of all homebuyers; homeownership is largely the province of America’s older residents, and it’s student debt, not a millennial murder spree, that keeps younger buyers out of the game.
We can’t ignore the topic of intergenerational wealth when we talk about home ownership today. As described by Richard Rothstein in The Color of Law, the federal government’s perpetuation of de jure segregation through policies related to housing is substantially responsible for keeping, in particular, non-white people out of the housing market. These exclusionary practices are far from stamped out: As the Center For Investigative Reporting showed on its Reveal podcast, people of color are significantly more likely to be denied a conventional home purchase loan in 61 metro areas across the country.
Though many are increasingly questioning the viability of homeownership as a way to build wealth, it doesn’t appear to be going anywhere anytime soon. That the wealth gap between black and white Americans is driven mostly by homeownership is a narrative that’s emerged over the past few years; as the Fair Housing Act turns 50, that narrative has come to dominate—and rightfully so. However, closing the wealth gap shouldn’t be—mostly because it can’t be—limited to homeownership alone, as a recent Duke University paper argues.
That paper, though, still uses homeownership as a springboard to equity, albeit in a more far-reaching way than we typically talk about:
If the goal truly is to eliminate the racial wealth gap, policymakers should be concerned with providing, at the very least, an initial, significant financial endowment to black young adults to invest in an asset like a new home, as well as an aggressive campaign against housing and lending discrimination, which limits the asset appreciation of the housing stock and financial products available to blacks.
When Home is Just a Commodity
So why homeownership, anyway? We are incentivized to put our wealth in housing through policies like the mortgage interest tax deduction, of course. But the louder siren song is perhaps the cultural norm of owning a home, a clearly anticipated step on the ladder to conventionally accepted adulthood in the U.S. (On which the potential elimination of the mortgage interest tax deduction, for what it’s worth, has insofar had little impact.) Which brings us to this discomfiting contradiction: The concept of home might resonate emotionally, but the houses in which we make our homes are little more than property. Property is for people who can afford it, and many, many people have been, are, and will be shut out of affording property. Homes and houses are interchangeable, and they’re commodities.
It is, of course, easy to let that emotional resonance of “home” obscure this cold and unfeeling reality. I live in a neighborhood on Cleveland, OH’s Near West Side that has been marked over the decades as a place where middle-class, educated, mostly white Clevelanders are proud of hard-won tenets of community control. Around this time last year, I noticed signs in a number of yards declaring, “My community is NOT your commodity.” “Community,” on these signs, is graphically represented as single-family homes; commodity, as a multi-unit building under erection by a crane.
“The concept of home might resonate emotionally, but the houses in which we make our homes are little more than property.”
The signs, to my understanding, were crafted to protest a small rash of luxury development nearby. On its face, that’s fine. But the symbols co-opt a long tradition of assigning moral good to owner-occupied single-family homes and deviance, dangerousness, and dissatisfaction to everything else. And they’re hurtful, not to developers, but to the real, actual humans who don’t slot into the homogeneity of this slice of Ohio City’s dominant housing type. Luxury is purely a marketing term that’s become so prevalent that taking it as a value to be judged is unhelpful. Community control, perversely, has created controlled communities.
My Homeownership Journey
I bought my house in July 2016. Lest you think I am being unfair to single-family homeowners, I am one: My co-owner and I lived in a newly renovated one-bedroom loft-style apartment that was, by all accounts, fantastic—except when it rained, and water would seep down the concrete walls, requiring us to pull the furniture away and put towels over the windowsills. It was impossible to get answers out of the property-management company.
Romantic notions of “home,” where we could cook dinners and host parties and pick the paint colors and sit on the porch on nice days, certainly echoed in my head. But it was fundamentally the frustration over our walls-turned-waterfalls—which made me think, “If something like this is going to happen, I’d rather it be my responsibility”—that spurred a search for something to buy. We were privileged on every level: We had the time to attempt to negotiate with property management; when that dead-ended, our combined salaries afforded us a lovely two-bedroom, two-bathroom house a ten-minute walk from where we were renting.
But that path is increasingly difficult to access. It is not something we could have done in D.C. or San Francisco, the cities I lived in before I moved to Cleveland. And our lives are shifting: My co-owner is headed to New York for grad school in the fall, and I’m in the midst of reevaluating where I want to be, too. In this way, though we are homeowners, we may ultimately more closely match the subjects of this recent CityLab piece:
The homeownership rate is lower in America’s more dynamic, more innovative, and more knowledge-based metros. This a product of the fact that these metros are more expensive, but it also speaks to their urban form. Having a larger stock of rental (usually multifamily) housing helps provide the flexibility required to absorb the young people and mobile talent that fuel their economies.
The True Meaning of "Home"
The “true meaning of home” that Berkshire Hathaway hawks in its podcast sponsorship copy isn’t inherent to homeownership—I’ve been sentimentally attached to apartments, too. But combined with the chunk of money that you put down; the possession of a title; and the creeping sense that, at least in the Clevelands of America, your asset might not appreciate as directly upward as you might expect, “the true meaning of home” is a powerful elixir both personally and politically. Which is, perhaps, why we see such vitriolic rhetoric from an entrenched class of homeowners when there is merely a mirage of change in the vague vicinity of where they live.
“The only gainers in housing wealth over the past 3 decades have been older Americans. Those under 55 today have accumulated far less housing equity than previous generations.”
A prime example is less than a mile from my house and mere blocks from a thicket of “My community is NOT your commodity” signs, where “a few nearby homeowners [are] outright opposed” to plans for a five-story building on what’s currently a parking lot, “describing the proposal—based on its size, closeness to the street and partial siting on land currently zoned for two-family homes—as an ‘abomination’ that ‘would destroy the soul of this neighborhood.’”
Summoning “the soul of the neighborhood” to knock back something that one dislikes personally is what Emily Badger, in this New York Times essay, explicated as the shift from “not in my backyard” to “not in my neighborhood.” That the pushback against anything new is often delivered by a comfortably entrenched, systemically privileged class of homeowners with words that sound like they’re strung together in good faith—community, soul, neighborhood, affordability, balance—is the inevitable manifestation of Joe Cortright’s theory of gerontopoly. And that theory exposes the scaffolding of flaws that’s warping the contemporary truths of homeownership:
The only gainers in housing wealth over the past 3 decades have been older Americans. Those under 55 today have accumulated far less housing equity than previous generations. For boomers and the greatest generation, homeownership worked out well as a wealth building strategy. But, in large part, that’s because they followed the old investment adage, “buy low and sell high.” If you could buy US homes at 1970s or 1980s prices and hold them for decades (as many of today’s 55 and older homeowners have) you’ve reaped a substantial investment gain. But for those who bought more recently, especially in the height of the housing bubble, the road has been considerably rockier. They’ve already fallen dramatically behind previous generations in building equity, and the only way that they’ll catch up is if home prices accelerate further–which implies that housing becomes less affordable for everyone else.
The Exclusionary Nature of Homeownership
It’s very pretty to think that if a house’s owners protest perceived societal ills loudly enough, they will somehow offset their contribution to a structure that has systematically kept people out. But homeownership is exclusionary from top to bottom. Buying a house means not just hoarding wealth, if you’re lucky, but buying into the reality that your ZIP code essentially determines your fate; that redlining as encoded by the federal government’s Home Owner’s Loan Corporation is alive and well; that with the aid of de jure and de facto housing segregation, our schools reflect white America’s preference to be around people who look like us.
“Buying a house means not just hoarding wealth (if you’re lucky) but buying into the reality that your ZIP code essentially determines your fate.”
More luxurious than a glassy condo with granite countertops is putting away money in a country whose wages have stagnated and whose worker protections have eroded. If you can emerge from the long and ever-extending shadow of top-down policies like redlining, you’re faced with the enormous hurdle of saving for a down payment. Combined with the fact—which is more of a cruel joke—that economic mobility is greatest in the U.S.’s most expensive cities, it’s no wonder renting is the best option for an increasing number of people. That renting puts one at the whims and disposal of landlords is a problem not because landlords are inherently bad. Rather, their interests, and not their tenants’, are protected and supported legally and culturally. Some landlords may be benevolent, but all have an investment to protect.
Housing, as so many tenants’ rights and fair-housing groups have argued for decades, is inextricably tied to all aspects of our lives. The right to shelter should be just that: a right. But in our rigid encoding of what homeownership signifies, we have limited that right to those that can afford it.
ABOUT THE AUTHOR
Alex Baca has worked in journalism, bike advocacy, architecture, construction, and transportation in D.C., San Francisco, and Cleveland. She’s written about all of the above for Washington City Paper, CityLab, Slate, The American Conservative, Cleveland Magazine, Greater Greater Washington, and City Observatory. She's been a member of Strong Towns since 2016. Follow her on Twitter @alexbaca.