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The housing crisis
Two out of every three people in their twenties and thirties hope to buy a house in the next five years, and yet currently eighty nine percent of individuals have significant financial barriers blocking their path to homeownership.1
Currently, purchasing a home is the least affordable of all times. The home, a place to raise a family and a centerpiece of American community, is now a faint dream of the past. Secondarily, a major vehicle of growing wealth is evaporating as a possibility for a large number of young Americans.
How did we get here?
Financialization of all things
Financialization is a term that I learned from the CEO of Blackrock, Larry Fink. It came in reference to the utilization of crypto; as we seek to financialize all assets, the easiest way to provide liquidity on those assets is through a tokenization of assets.
It’s a lot to get into, but I want to focus on the financialization of these things.
The process of financialization is to take an asset and make it something that is easier to buy and sell. This has become a bigger deal in the housing place because accumulating wealth is supposed to be a secondary benefit of the true purpose of the home.
A house is not a vehicle to make money, but a shelter for a family.
But, through the process of financialization, our culture no longer prioritizes families in homes. Instead, housing has become another investment in wealthy individuals’ portfolios.
Around a quarter of single family homes in the U.S. are owned by investors and that number is expected to go up.
These investors hold houses for a multitude of reasons. For some, it is their vacation home. For others, they use their investment as a short term rental in a popular vacation spot for others to rent out. Some have purchased home that others may rent.
And still others sit vacant.
I am not saying that wealthy individuals should not be able to invest in this manner, but I am saying that wealthy individuals are driving up home values in such a way that it is becoming impossible for everyone else to purchase a home.
I actually feel strongly that wealthy individuals should have the freedom to invest this way if they want.
But, we need to be honest that the system we have now only benefits a few people at the top who do not treat housing as a place to raise a family but as a way to gain personal wealth.
So, what do we do?
Change housing codes
My wife and I were looking to build a home, as we felt we would be able to get more of what we wanted in a location we wanted if we build.
But, being of modest income, we knew we would need to build a small house.
We found some plans that we really enjoyed. They were open concept so that, though the space was small, it still would be open enough to host small gatherings. And the kitchen was beautiful.
We called up a builder and shared our plans. But we were told that a house of that size would not be allowed to be a primary residence in the county we were planning to build in. New homes has to be over 950 square feet.
But if housing is going to be so expensive, is it not time to revise certain rules, like sizing rules? For a 950 square foot house, we were told that all in it would cost around 300,000 dollars. In Marysville where I currently live, you can hardly find a home under that 300,000 dollar threshold. In many other places, people wish they could find or build for those prices.
For many people in my situation, this simply would stretch us too thin, if it would work at all.
One way to go at this issue is allow for different types of buildings to function as permanent residences. Allow for smaller homes, especially as average family size decreases across the country.
Change the culture
The home is supposed to be the centerpiece for community, not an asset to hold alongside the likes of stocks and bonds.
Community participation is at all time lows. People struggle to find friends. We are in a loneliness crisis. People are choosing to get married later in life if they get married at all. People are in turn waiting to have kids, if they will have them at all.
How much of this is to blame on unaffordable housing?
When I wanted to hang out with friends, so often we went to a friends’ house. Or they came over to mine.
Sunday dinners at my grandmother’s were made possible because her house was just barely big enough for all of us.
We used to fill our side yard with friends for birthday parties. We had big bonfires at night, inviting just about anyone we could think of.
Raising up two boys in a home and an apartment, I can tell you plainly that there is something special about those boys making a place their own.
Losing homeownership is losing part of our culture. And it is a part of our culture that is good.
Stop the Doom-Spending
“Doom spending” has been a trend during this time of unaffordable housing. It is a movement among the young people who have saved up money to buy a home, but seeing it out of reach, they choose to just spend their savings on travel and things they want like new gadgets or cars.
Though the system in place is not built to help the younger generations, I wonder how much Millennials and those in Gen Z are willing to sacrifice to have a house.
I feel the pressure from Instagram to travel and have the nicest gadgets or newer car. But I have given up many trips, many chances to buy new clothes, many chances at new tech, in order to buy a home.
Sometimes, if you want a home, you have to live somewhere else, which is also a sacrifice. For example, Olga and I wanted to live in Marysville. But it would have cost us financial stress. So, we found a house in Prospect that is much more affordable in a cute little town. We will have to drive further to do some of the things we like to do, but we highly valued owning a home. Prospect fit us better.
I think that housing codes need to change as times have changed. Government intervention in some way will help address these issues. But I also do not think owning a home is something that will ever be just handed out. It takes hard work, planning, and some measure of sacrifice to have anything good in life.
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