Different people have different indicators they check to decide how they think the American experience is going. I have one in particular, and if it were the only sign I went by, I'd have to say the whole thing sucks about now:
For years I have been documenting all of the numbers that show that the middle class in America has been steadily shrinking, and we just got another one. According to a report that was produced by researchers at Harvard University, the number of Americans that spend more than 30 percent of their incomes on housing has more than doubled. In 2001, nearly 16 million Americans couldn't afford the homes that they were currently living in, but by 2015 that figure had jumped to 38 million.
When I write about “economic collapse”, I am writing about a process that has been unfolding for decades in this country. Back in the early 1970s, well over 60 percent of all Americans were considered to be “middle class”, but now that number has fallen below 50 percent. Never before in our history has the middle class been a minority of the population, but that is where we are at now, and the middle class continues to get even smaller with each passing day.
The main thrust of the story is the continued shrinking of the the middle class — the percentage described as that has now fallen below 50 percent for the first time ever — and the writer has a particular bugaboo about health care costs, but the increasing difficulty of home ownership is the thing that caught my attention.
Intellectually, I know that the idea of home ownership being a big part of the "American dream" is relatively new. It wasn't until the 1950s and '60s, with the great economic expansion starting at the end of World War II, and helped along by VA home loans for veterans, that we went from being a nation of 45 percent home ownership to well over 60 percent.
And factors like the recent housing bubble collapse can affect people's desire to pursue such a dream:
The Great Recession, which began in late 2007 and lasted for nearly two years, is still having an impact on the U.S. housing market. Since the bottom dropped out a decade ago, "new home starts" — used to describe when construction begins on a new home — have been sluggish.
That was until October, when they hit a nine-year high, then dropped in November, suggesting Americans are confused about where and how they want to live.
But emotionally, I think that part of the dream is as alive in our national consciousness as ever. An Apartment List survey of about 24,000 renters nationwide released in May found that 80 percent of millennial renters want to buy a house or condo sometime in the future.
When government folks talk about home "affordability," they have a particular number in mind:
Under federal guidelines, households that spend more than 30 percent of their income on housing costs are considered “cost burdened” and will have difficulty affording basic necessities like food, clothing, transportation and medical care.
I think that's slightly misleading. The last place we lived in Kentucky was an unpainted house owned by the coal company my father worked for. When we moved to Fort Wayne, we lived in a series of rentals, always part of a house that had been divided into two or more units. (Apartment complexes, if memory serves, were relatively rare in those days.) My parents scrimped and saved to be able to buy their own home, and they finally made it, after I graduated from high school, got a year and a half of college under my belt and went off to join the Army. It was a tiny little house on Reed Street in Southeast Fort Wayne, not the most upscale neighborhood in town, but the place was theirs, and it was a symbol that they had somehow succeeded in this city.
I know they struggled those first few years, so I highly suspect they were in that demographic that spends more than 30 percent of income on housing costs. But it got a little better each year as my parents made slightly more money and the house payment stayed the same.
That's the thing about home ownership, a real estate agent told me when my wife I were first looking for a home to buy. Never assume this house will always suit your needs. Buy with the idea that you will need more house in a few years. So buy slightly more than you can afford, and you will grow into it.
So that's what we did, and, as it happened for my parents, our house became a little more affordable each year until it was time to move to Fort Wayne, and by that time, we could afford a bigger house in a nicer neighborhood.
Certainly there was never any doubt that I would buy a house. Home ownership was a sign of success for my parents, and it became one for me as well. Of course now I'm divorced and stuck in a house that's way too big for me, and it's an older house that needs work more than occasionally and, alas, I am far from anybody's idea of a Mr. Fix-it. Logically, I know I should have something smaller, perhaps even something for which somebody else does the maintenance or at least the outside work. Hell, I've never been too keen on place attachment anyway, so I probably should just have a motor home I can park anywhere.
But, dammit, the place is paid for, and it is mine. I have carved out a little space in this big world where I can always go and do whatever I want. No matter what else I have or will achieve, no matter how far up or down the economic ladder I go, I have done that, and it's more important to me than I ever would have imagined.
I suspect the desire for that small feeling of accomplishment is felt by a lot, maybe most, of those Millennials who still aspire to home ownership. And I'm guessing most of them wouldn't mind being in that 30 percent group for a year or two. What's changed, I think, is that fewer and fewer people believe (with some justification) that they will have trouble getting out of that category, that no matter how long they live and work, they would always be paying at least 30 percent for housing expenses.
No wonder Mom's basement is so alluring.