Chart via Businessweek
Taken straight out-of-the-box, the authors at Time want this study from Harvard University to mean that home ownership is at an all-time low. I’ll get to that in a minute, but first it’s worth noting that they mean this is bad, or at least morally unfortunate. This is implied in the conclusion if you at least scan the executive summary whereby the outlook focuses on what could be done to improve participation in home ownership.
The issue, as always, gets worse in the secondary sources which take one or more angles on the data from the study. This includes Gen-X loosing homes in the 2008 economic crisis (Time demo?), millennials saddled with student loan payments and reduced job prospects, or urban poor facing increased rental costs with stagnant wages.
To avoid crapping yourself when you read these kinds of articles, ascertain with me what home ownership means to you. Then ask yourself why the title of the article is not that mortgage debt is at an all time low? For one, it isn’t (it’s a ten year low), and for two – stop asking questions! (On a related noted, consumer debt and college debt are at all time highs)
Nobody owns a home anymore. My next door neighbor Kafka is a perfect example. He knows home ownership is a 30 year commitment to sleep and eat there, paying taxes and keeping the lawn neat when he isn’t working his second job.
We don’t have a finance economy, we have a debt economy. And in a debt economy growth is made possible by the expansion of credit.
First, most of the data displayed in the Harvard report only goes back to 1980. Second, the U.S. census data upon which it is based only goes back to 1964. This temporal snap-chat is about as historically relevant as saying Caitlyn Jenner is feeling fat today.
The executive summary concludes with two tentative recommendations: Ease lending and build more public housing. So, goes the logic, this will also help millennials since a rising tide lifts all ships and surely continued economic growth will help undo the stagnant wages that keep them from participating more fully in the market.
The Joint Center is funded primarily by the Ford foundation. This may mean they think the government can help the poor by encouraging participation in the markets through reduced lending requirements, or that we are responsible for using public money to pay private companies to build market rate housing. If you can’t tell which political party is involved I’ll give you a hint: It doesn’t matter, the same company caters the inaugural ball either way.
The last recession taught two possible lessons both of which have vanished: (1) The role of the government should not be to encourage market participation through the expansion of credit, but to protect the citizens from it, or (2) Maybe the government should not be involved the markets to begin with.
An even more radical lesson may be that we collectively get to create what we mean by ownership and the responsibilities we have towards each other in this regard. I wonder if we’ll talk about that before, like has always happened in the past, people stop asking for you to let them have more debt and start demanding that you cancel it all and redistribute the land.
Regardless of whether you believe any of the above three lessons I’d suggest at the least that you as an individual consider that since your debt is a corporate revenue stream, you may not actually own your home qua capital.
Bonus question: If mortgage debt has decreased by 22% what has become of it?
*Final bonus: Free blog topic pick for the person who comes up with the best Jesus joke about the Resurrection of the Debt.