To own a house in America was once the can’t lose path to financial stability and wealth. Buy all the house you can, with as much as leverage as possible, once was considered the smart thing to do. Now rows of houses sit empty in some cities. In Motown, one in four houses is vacant writes Catherine Rampell for the New York Times.
A foreclosure notice has been served to one in 171 houses in Las Vegas, where some homes had been converted into pot hot houses. College students are moving to the comfort of the suburbs because it’s cheaper than dorm living on campus. Swimming pools are now skate board ramps.
Not exactly what Herbert Hoover had in mind with his “Own Your Own Home” program. Housing was to be the glue that kept American society together. Homeowners had something to lose, so hire all the cops required to keep the neighborhood safe and keep any foreigners away that might want to destroy our way of life and the vast freedoms we enjoy, like white picket fences, and an asset that can be leveraged to the hilt with government-subsidized moolah guaranteed to appreciate always and forever.
But things are different now. Post housing boom and bust, demographic multiplication has suddenly slowed to a trickle, as Rampell writes,
Household formation has slowed dramatically since the recession, as cash-strapped families double up and unemployed recent college graduates are unable to leave behind their parents’ couches. To judge just from demographic statistics, more than a million households that should have been formed in the last few years weren’t, according to Mark Zandi of Moody’s Analytics.
And how long will the 11 to 15 million underwater homeowners keep feeding Fannie, Freddie and the rest of the TBTF brigade? It only took Larry Crowne (Tom Hanks) one class from Dr. Ed Matsutani (George Takei) and a bank that wouldn’t negotiate for him to do a cinematic strategic default (called strategic foreclosure in the film) with no shame or regret.
A new feel-good movie ending: The hero gets the girl (Julie Roberts) and walks away.