I almost bought a house in the town Oprah once dubbed “the happiest place in America.” In the spring of 2022, my partner and I put down a deposit for a house being built in a new development in San Luis Obispo, California, where I teach. The house, where we were going to live with our daughter and my partner’s father, is now finished, with all the interior details we carefully selected. But someone else lives there.
The last time we looked at the house before our plans for the down payment fell through, the backsplash and cabinets had just been installed. The oak floors were coming along. Although we’d had some reservations about the new home, we were excited about being the owners of a single-family home with a yard. I had become psychically invested, more and more attached to the idea of being a homeowner and to this house in particular.
Our failure to buy the house places us among the many would-be homebuyers priced out of the market due to skyrocketing prices. In April 2022, 92 percent of renters could not afford, without outside assistance, the typical minimum down payment of seven percent for a median-priced home. Those who do buy houses must often draw on family wealth to do so. And even for those who can come up with the down payment, the growth in interest rates often puts monthly mortgage payments out of reach.
Given my background—I’m a white, third-generation PhD from Appalachian Ohio—I always assumed I’d own a house someday. But the deeper we got into the process, the more I came to question the deeply held understanding of home-buying as an investment—indeed, “the most important investment you’ll ever make.” The importance of this investment aspect became especially pronounced when our circumstances changed and the prospect of buying the house became much more financially burdensome and risky. As my partner and I debated whether to go through with the purchase, almost everyone assured us that buying the house would be a good decision because it would be a good investment. That put us in a peculiar place. The very thing driving us away from the market—the steady increase in prices—was supposed to guarantee our financial security. The problem with the housing market as a whole would become, as soon as we closed, our personal salvation.
San Luis Obispo (or SLO as locals often call it) originally got its “happiest place” moniker from bestselling author Dan Buettner. Among the reasons he cited was a longstanding policy of limiting housing development. Although the city is currently in the midst of a construction boom, this historic policy contributes to the strength of the local real-estate market—a phenomenon that our real estate agent, the developer, our mortgage lender, and plenty of friends drilled into my partner and me as we decided whether to buy the house.
Investing in a house means investing in the housing crisis. Reliable increases in prices buoy homeowners even as they leave more people rent burdened or unhoused. Housing shortages ensure that the market remains robust and bolsters the wealth of individual homeowners. This means that home shoppers quickly “change sides” when they go through with a purchase. As the satirical site McSweeney’s deftly put it, “Housing should be affordable except when I sell my house for a million dollars.”
My experience of the housing market is in line with that of my generation as a whole. According to an analysis by the Berkeley Institute for Young Americans, the rate of home ownership for millennials at age thirty was 15 percentage points below that of baby boomers at the same age. The gap narrows for millennials in their early forties, but their rates still lag significantly behind baby boomers’. Considering the increase in prices and the relative weakness of wage growth, it’s surprising this gap isn’t even worse. A ConsumerAffairs analysis found that, after adjusting for inflation, “Gen Zers and millennials are paying nearly 100 percent more on average for their homes compared with what baby boomers paid in the 1970s.” Today, baby boomers have a homeownership rate of 78 percent, compared to 52 percent of millennials.
Homeownership, we are told, binds homeowners to the well-being of a locale. They care more than renters do about schools and local politics, for example. But because their investment in the community is of a piece with their personal financial investment, their interests can also conflict with broader social needs. Many homeowners, as in SLO, are NIMBYs, rallying against new housing developments for a number of different reasons, including the impact more housing might have on home prices.
NIMBY resistance to new construction is no small part of the nationwide housing crisis. As Derek Thompson writes in the Atlantic, “From New York to California, deep-blue cities and states have amassed a pitiful record of blocking housing construction and failing to meet rising demand with adequate supply.” In famously progressive Berkeley, for example, the North Berkeley Neighborhood Alliance and Neighbors Not Towers have organized to stop high-density housing construction near the North Berkeley transit system. In the New York Times, Daniel Duane, who grew up in Berkeley, detailed his own mother’s resistance to this construction: in addition to property values, she worried about crime and “less afternoon sun.”
While there are also pro-housing organizations in Berkeley and elsewhere—and plenty of homeowners who do advocate for more affordable housing—homeowners’ attachment to their own financial investment usually wins out. And new affordable housing isn’t the only social good that loses. Anything that might affect home prices, like school integration or busing, faces reliable opposition.
Indeed, the power that homeowners can wield in certain communities suggests we may not be as far as we think from the days when political rights were explicitly tied to property ownership. To a large extent, property ownership still confers status and signifies civic and political belonging. Effectively denying property ownership to large swaths of the population replicates the more explicit political exclusions of earlier eras. Yet holding out to everyone the hope of homeownership, and the financial gains it promises, helps to blunt critiques of the system. Rather than decry the regime of inequality, we are encouraged to buy into the “American Dream.”
Buying homes as an investment isn’t new, of course, but beginning in the late twentieth century, investment became central to the enterprise. In the lead up to the 2008 financial crisis, feminist political theorist Joan Tronto writes, “People began to think of where they lived not as their home, but as their most clever investment.” Even after the housing bubble burst, this orientation persisted.
In recent years and as part of the broader growth of the financial sector, private-equity firms have bought up an increasing number of homes on the market. While the proportion is still relatively small, and thus likely not a primary factor of the housing crisis, firms like BlackRock bring the ideology of homes-as-investment to its logical conclusion. Homes have become, in Tronto’s words, “a resource to exploit.” Investment firms buy houses for the same reason that motivates many individual homebuyers, but without the baggage of actually needing a place to live.
The changes in our conception of home-buying reflect the way neoliberal, financialized capitalism has not only reshaped many parts of the economy but the way we understand ourselves. As cultural theorist Michel Feher has written, we have come to see ourselves as our own personal brands or stocks, rising and falling in the market. We constantly evaluate the speculative value of our assets, including our personal characteristics and skills, and we treat life decisions as a means to enhance our “value.” This financialized logic leads to constant speculation about the future and tends to make us discount problems—a large mortgage, say—in the present. If homeownership confers status, a growing home value signals the owner’s rising status. Your growing wealth reflects your investment acumen, your smart financial decisions, and thus your worth as “human capital.”
Neoliberalism has hollowed out social services and entitlements while reducing the supply of stable jobs with solid benefits, including pensions. This means individuals—as many neoliberals hoped—have been forced to focus more on securing their financial futures. There’s no safety net. Homes in this context are not just an investment, then, but for many buyers a retirement plan, an emergency fund, and a guarantor of financial security all rolled into one. This doesn’t just leave those who can’t afford homes out in the cold; it also leaves homeowners themselves vulnerable. Because their financial futures are so tied up in their homes, which often come with burdensome mortgages, any disruption to the housing market or collapse in prices could be devastating.
My partner and I didn’t start out looking for a home primarily as an investment. We were driven into the home-buying frenzy out of concern for my father-in-law. My partner is an only child and his mother died when he was in his twenties. Since then, his father, who is now eighty-three, has lived by himself in the Louisville, Kentucky, area. He is generally in good health, but as he ages he wants to be closer to us, my ten-year-old daughter especially, and my partner wants to be there for his father when he needs caretaking. So we decided to try to pool our resources and buy a home that would be big enough for all of us.
Our plans depended on my father-in-law being able to sell his townhouse outside Louisville at a significant profit. We were hoping, in other words, that my father-in-law could reap the rewards of the investment he made in his own home. This money would help us make a very large down payment so that the mortgage would be affordable. It seemed like my father-in-law was poised to cash in on the pandemic boom in home prices, but by the time he got his house on the market, the Federal Reserve had started raising interest rates. When a potential buyer pulled out at the last minute, our whole home-buying scheme fell through.
Having grown up first in public housing and then in a home in an area of Louisville that the Home Owners’ Loan Corporation shaded yellow (one grade above the redlined, “hazardous” areas) for a “definitely declining” area, my father-in-law, who is Black, cannot draw on the kind of family wealth that a lot of white people can. Discriminatory housing policies and practices like redlining contribute to the longstanding white-to-Black racial wealth gap, which currently stands at about 6:1. The white homeownership rate is 74 percent, while the Black homeownership rate is 46.6 percent.
Racial disparities are a significant aspect of the web of unequal power relations that structure the housing market and the options people have within it. The real-estate industry and federal policy have long operated to ensure that wealth via homeownership accumulates most rapidly for white families. What has been called “racial capitalism” structures who can afford a house as well as which houses are deemed “desirable” and thus most likely to offer a good return on investment. From redlining to more recent predatory real-estate and lending practices, the benefits of home ownership have been heavily racialized in the United States. Keeanga Yamahtta-Taylor has traced the ways race informs home values. The value of housing isn’t determined solely by supply and demand, she explains. Rather, “the market is a reflection of that which we hold to be valuable, that which we see as desirable, that which we see as undesirable. And it’s impossible to measure that without factoring in race in the United States.”
The desirability of SLO—and the attendant high cost of homes—is connected both to a housing shortage and to the town’s whiteness. With the onset of pandemic-era remote work, many white-collar workers who had previously had to live in or near cities for work moved to desirable areas with relatively lower housing costs. SLO was among the communities negatively affected by an influx of such workers, attracted by the area’s natural beauty and its murkier “desirability.” The population of the city is much less diverse than California as a whole and residents are much less likely to be immigrants. The census reports that 82.4 percent of the city is white. In the first part of the twentieth century, the whiteness of the town was ensured via the widespread use of racially restrictive covenants, which prohibited the sale of homes to people of color.
Taylor critiques the tendency to push homeownership as a solution to all sorts of problems, but she does not suggest “that Black people should be consigned to the rental market.” She only seeks to “question a social order that makes the quality of one’s life and the substance of one’s citizenship contingent on the possession of private property.” This is the central problem: the rent-or-buy binary leaves too many people with no good option. Rental prices have soared, too. One recent analysis shows that about half of all renters qualify as cost-burdened, spending 30 percent or more of their income on rent, while a quarter spend more than half. Escaping rent under these conditions is crucial, but chasing after homeownership as a prized investment reinforces an unjust system. As with so many other things in this country, the “rational” individual choice neglects consideration of others or baked-in structural injustices.
What’s more, the ironclad belief in homeownership as a surefire investment can push people into taking on mortgages that place them in the growing number of homeowners who are themselves cost-burdened. The Harvard Joint Center for Housing Studies reports that of the almost 20 million homeowners who are cost burdened, 9 million “are severely burdened, spending more than 50 percent of household income on these costs.” These rates are highest among homeowners of color and low-income homeowners, but the percentage of homeowners who are cost-burdened has increased across the income spectrum in recent years.
Had my partner and I decided to purchase the home with a smaller down payment—and factoring in property taxes, insurance, and HOA fees—we would have joined this group of severely burdened homeowners. It was striking how many people nonetheless pushed home-buying on us as a panacea for any future economic insecurity. To buy the house, we would have had to cut our discretionary spending and savings for retirement and college, and if and when we faced costly, unforeseen expenditures, our finances would have been severely stressed. Many urged us to buy anyway—it would all pay off, they said. In the end, we weren’t willing to take the risk. Being able to afford our housing now was more important to us than a promised, far-off financial reward that might not materialize.
More housing, as both Kamala Harris and Donald Trump promised during the presidential campaign, would help alleviate the housing crisis. But we also need other alternatives, like public housing, to encourage a shift away from the view of housing as an investment. An oft-mentioned strategy is community land trusts, which sell homes at restricted prices on land that the trust owns. These trusts—which originated with the civil-rights movement and have been expanding recently—allow homebuyers to build equity, but the house must always be sold at a below-market rate. These houses aren’t lucrative investments since their prices are fixed, but such schemes ensure that one’s own equity is not built at the cost of affordability for the community as a whole.
My own condo is subject to similar restrictions. The condo complex is on land owned by the public university that employs me, and the units are price-controlled so they remain affordable for university employees, who receive priority when homes go on sale. If we were to sell right now, the amount we would be able to charge would be about 60 percent of the market rate.
To create these kinds of alternatives on a wide scale, we must build community and solidarity. And we need to recognize that the dominant narratives about homeownership can themselves be a bar to community-building. These include both the logic of investment and a fantasy of control and separation that often animates the desire for a single-family home. Large, detached homes allow us to insulate ourselves, giving us more control over our interactions and relieving us of the need to figure out how to live together and resolve the resulting disputes over noise, parking, trash, and so on. The Pew Research Center reports that 57 percent of Americans would rather live in a place where “houses are larger and farther apart, but schools, stores and restaurants are several miles away.” This isolation of our homes reflects and deepens the loneliness crisis. Clinging to homeownership as a means to both economic well-being and political belonging contributes to the decline in collective solidarity and to the diminishment of democracy.
While living near others brings challenges—my own HOA’s attempts to enforce rules about outdoor plants and garage usage have been the worst parts of my living situation—it also has benefits. Some of the things I have been trained to think of as drawbacks turn out, from a different perspective, to be assets. While part of me wants a yard and a detached house, the density of housing in the complex has fostered a sense of community. Many of us with children gather for weekly happy hours at the communal picnic tables. The kids play in the complex’s communal spaces and in any nook and cranny they can find. We are always keeping an eye out for and hosting one another’s children. This kind of community is rare in our town.
I also take some solace from the fact that I am not banking on rising home prices for my financial well-being. Not because I think the market will collapse, but because I do not want to be materially invested in the housing shortage. I recently met with a financial advisor and when he heard about the restrictions on my condo he replied, “You’re basically a renter. Don’t you feel like a renter?” I tried to explain that, in fact, I do not. My mortgage is affordable, and I don’t have to worry about rent going up. A large percentage of my monthly mortgage payments goes to paying off my principal. He told me to save up my money for a house, and to do so quickly.
As much as I love my community, I am also stuck here, in my two-bedroom condo, because of the housing market. My partner and I have no clear plan for my father-in-law to move to California and no idea how to do so without serious financial risk. Although I feel stuck personally, I am also cautiously optimistic. If we come to see the pervasive logic of housing as investment as a foundational problem, then there will be a silver lining to the growing group of people excluded from homeownership.
The intensity of the desire to invest in a home is a reflection of what activist and author Astra Taylor calls manufactured insecurity. Our social structures have so deeply failed to provide for our collective well-being that we have become more focused on doing whatever we can—including home-buying—to shield us from precarity. But such decisions strengthen the systems making us so insecure in the first place. As long as we hold out investment homes as the key to economic well-being and political belonging, the structural problems will be exacerbated.
What we need is a sense that our fates are bound together. Pushing home-buying as the path to security and prosperity further entrenches individualism and weakens community. But shared housing insecurity could be one basis upon which to build the solidarity we so desperately need.
