[Review] The Homeownership Obsession

The Homeownership Obsession

How buying homes became a part of the American dream — and also a nightmare.

By Katy Kelleher Illustration by Kelly Abeln

Source: CITYSCAPENOV. 13, 2019

Original Article URL: https://www.curbed.com/article/why-buy-house-homeownership-history.html

What is the main point(s) of the reading/theory? What is the evidence supplied by the author(s) that the theory is valid?

If I could define this article in one sentence, it would be something like this:

"As society and people's lifestyles have changed, the way people view homes has changed, and as a result, people in the United States are changing their preferences for real estate and how they buy it."

In the past, for people, a home was the basis for the family's survival, coexistence, and prosperity. All human relationships and social life have been designed and operated around the home. Owning a house meant that we had the least amount of security, which gave us the driving force to move forward with our future development. Therefore, not only personal goals, but also the direction of the government's policy was focused on owning as many people as possible. People thought it was ideal to mow the lawn in their own home garden and lead a peaceful life with family members.

However, the reality did not go in the direction that people and governments hoped for. In fact, most good homes could only be owned by some wealthy people. To prevent this bias in housing supply, the government has developed a policy to provide more housing opportunities to low-income families. However, such a policy had the side effect of exacerbating the housing bubble due to excessive mortgages, which eventually led to the worst economic conditions for the United States in 2008. And this economic crisis deepened the social polarization between those who could afford to buy a house and those who couldn't, and changed many things in society afterwards.

Also, people no longer consider their home to be the foundation of their lives. In the past, people preferred to live in generously sized houses located on the outskirts of the city. After marriage, people have dreamed of buying a nice house, having a baby, and living in the house with several families for a long time. But now people are starting to perceive large houses as an inefficient form of housing that consumes excessive energy. Also, people think that various maintenance (house repairs, etc.) costs incurred while living in a large house are excessive. Crucially, they no longer prefer the hustle and bustle of multiple generations living in the same house. They prefer to live alone or quietly with a minimum of children.

Especially the younger generation thinks that their future can change at any time, and expects that their financial situation will not always be good. They know very well that their lives won't reliably follow one path. They expect to have multiple jobs in their lifetime and live in multiple locations. For those with this mindset, buying a big house in the suburbs is actually a factor that hinders their lives. Besides, it's foolish to buy an expensive house with a mortgage. That's why, in the long run, people think it's wiser to move in frequently as circumstances change, rather than investing in a bigger home where you can live for a long time. This is spreading around Generation X who experienced 2008.

For the younger generation, a home is an investment, not a residence. Millennials are trying to secure their own assets as much as possible rather than living in someone else's house and paying rent. In other words, they think it is wise to increase value over time through investing in assets rather than incurring costs. They also live in the same house with outsiders as needed. This is because outsiders may also generate rental income.

As a result of this, large houses on the outskirts of the city are no longer popular. The market itself is disappearing.

How does that point appear in historical, contemporary or potential future social changes?

This article develops logic limited to American society and the American real estate market. However, the points pointed out in the article can also be applied to South Korea, where I live.

Baby boomers aim for a family-centered life. That's why they prefer large houses that can accommodate the whole family. However, as the core generations of society pass over to Generation X, Generation Y, Millennials, and Generation NZ, the size of the family decreases. Even among young people, there is a strong tendency to not want to get married or have children. Therefore, the demand for small and medium-sized houses is increasing rather than large houses, and even in the same area, the prices of large houses and small/medium houses are similar.

In addition, baby boomers received high salaries during a period of high social growth, and home prices were low at that time, so they could afford to buy real estate. However, while home prices in South Korea are extremely high, economic growth has stagnated. This has forced the younger generation to buy real estate with limited income. This is close to impossible. They have two options: either buy the house (and sell it when the price goes up) with a maximum loan from the bank, or give up buying the house. Whatever their choice, they no longer want a big house. And they want a small but efficient home. And they see the house as an investment.

As a result, I expect the wealth gap between baby boomers and younger generations to widen over time. In fact, the government has tried various policies to solve these problems, but none of them have been successful so far. I can't even estimate what will happen in the future.

What part of the reading/theory doesn't make sense or might even be wrong?

If I had reviewed this article before 2019, I would have resonated with most of the author's points. But at the end of 2019, a huge factor of uncertainty emerged in the world: COVID-19. Many people have had to carry out their personal lives and work from home instead of traveling for social activities. Fortunately, IT technology has made it possible to work and communicate remotely. As a result, people again began to prefer larger homes with both office and hobby space. Moreover, it is worth thinking carefully about the possibility that a global pandemic similar to COVID-19 will continue to emerge in the future. In the worst case scenario, we are likely to further limit our physical contact between people. And even for a longer period of time.

Therefore, we need to create new and updated insights taking into account both the points of this article and recent events.

What does this reading/theory assume about people or society that distinguishes it from other theories from prior weeks?

I can find that the clear social change phenomenon that runs through this article is that ‘family units become differentiated and smaller’. Indeed, Spencer argued that society evolves from a ‘military society’ to an ‘industrial society’. This theory can actually be applied to almost all fields of social change, and it is believed that the change in the family structure described in this article does not deviate too much from his theory. In the past, extended families were formed around the oldest or the head of the family, but now the central power has weakened and families have been subdivided. I think it's very natural for people's perception of housing to change accordingly.

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