[Marxism] Scenes from the housing boom

[Louis Proyect <lnp3@xxxxxxxxx>]

http://www.salon.com/mwt/feature/2009/02/28/gimme_shelter/index.html
Scenes from a housing boom
At the height of the real estate bubble, I was desperate to buy a home. 
I had no idea what kind of trouble I was borrowing.

By Mary Elizabeth Williams

Editor's note: The follow is excerpted with permission from "Gimme 
Shelter," published by Simon & Schuster (March, 2009).

Feb. 28, 2009

In 2003, after leasing a charming but erratically maintained Brooklyn 
brownstone for several years, my family and I decided to attempt the 
impossible -- to become homeowners. But two years later, with nothing to 
show for our efforts but a lot of cancelled rent checks, we were still 
searching. The Brooklyn we had originally fallen in love with was 
disappearing under new construction and chain stores, and the housing 
market was more out of control than ever. Then a reconaissance trip to a 
new neighborhood, in upper Manhattan of all places, gave us fresh hope. 
The only question now was -- had the bubble inflated too far beyond our 
means?

We are feeling optimistic enough about our prospects that Jeff meets 
with our accountant to get a clear sense of our finances and possible 
down-payment picture. I was supposed to be there too, but our daughter 
Lucy is home with an ear infection, so I'm doling out penicillin and 
running an all-day "Wizard of Oz" festival instead.

Our accountant makes me tense. When I'm around him, I feel judged for 
how little I make, ashamed that I'm not performing up to expectations. 
The last time I was in Laurence's office, he bluntly demanded to know 
why we weren't saving more. I told him it was because we weren't earning 
more, and I felt thoroughly mortified about it.

I'm cranky and edgy all morning; between the feverish child and the 
whole unceasing trying-to-uproot-our-lives thing. The ring of the 
telephone doesn't make it better.

"We may have to wait a while," Jeff says gently. "Laurence says that 
most co-ops will ask for 20 percent down, and we don't have much 
liquidity. He thinks we should try to put a thousand away every month 
for a year."

"Well that's bullshit," I whisper as Lucy naps, "because housing is 
going up faster than we can keep up. Does Laurence know that? Does he 
read the papers? What good does it do to save $12,000, even if we could, 
which we can't, when a place that's $350,000 now will be $70,000 more in 
a year? Did you tell him that interest rates are going up? Did you tell 
him to go blow himself?"

Jeff informs me he did not.

Then I can't talk anymore. "I have to go," I say, and I hang up and put 
my head in my hands for a long time.

It's not that I think buying a home will make us happy. I do believe it 
will make us more secure. And the thought of not having that security 
makes me sad. A home is not like wine. Its intrinsic merit does not 
increase with time. Its value is whatever the market says its value is. 
Part of the terror and the thrill of real estate is how much of it rests 
on the "bigger fool" theory. You buy at a certain price, then you find 
the sucker who will buy it from you at the most obscene markup. Then 
that person can turn around and do likewise. None of the houses in 
Carroll Gardens, the Brooklyn neighborhood where we live, have changed 
radically in the last three years. The perception of their worth, 
however, has, to our utmost exclusion.

"It's never going to happen," I say dejectedly to Jeff that night as we 
curl on the couch. "We're giving our landlord over $20,000 a year to pay 
off her mortgage. We're living in her house; we have to tell our kids 
they can't play in her front yard. I want our money to be going to us, 
to our home. We have nothing."

Finally, he speaks. "I guess I didn't think of it that way. I thought 
you save up and buy when you're ready. The bubble makes you rethink the 
idea. Everything's moving further and further away faster and faster. 
And we're watching it happen."

The next week, my friend Sharon calls to say that she and her upstairs 
neighbor are combining forces for a stoop sale on Sunday. They are 
motivated by the fact that one of the city's biggest real estate firms 
is having an open house for the monstrous condo that's going up down her 
street, and, as Sharon explains, "I want to know which member of the 
Strokes is moving to the hood now."

When, four years ago, our neighbors Jennifer and Vincent bought the 
three-family brownstone where Sharon also resides, they paid $780,000. A 
year and a half ago, developers bought the sixties-era eyesore a few 
doors away that was going for a million. Then the buyers razed it and 
for the past year have been banging and clunking around the clock to 
build something new.

It now vaguely resembles the other structures on the block, in that it's 
brown, and stone. The McLoft also has enormous windows and imposing 
silver columns. Henry James has collided with the Enterprise. Sharon and 
I stand outside with our jaws slack. "Who designed this thing?" she 
asks. "Mies van der Douche?"

Although the building, which now has a European name and a Web site, is 
still very much a plywood-enclosed husk, units are officially on the 
market. The top floor is going for $1.2 million. Most of the other units 
come in at the million-dollar mark, but a 675-square-foot one-bedroom 
can be snagged for half that price.

Sharon reasons that the foot traffic to gawk at the open house can only 
help her move her castoffs. She puts up a yellow sign on Court Street, 
halfway between the subway exit and the new building. "Here to buy a 
million-dollar condo?" it reads. "Perhaps you'd also like my used dishes."

The girls and I come over for the afternoon, toting some barely used 
books and baby clothes. We're presumably there to help, but really we're 
in it for the freak factor. The locals provide plenty, including the old 
guy who pokes hopefully at my cleavage and asks, "How much for that?" 
and the woman who tells us she makes wedding clothes. For dogs.

Our attention is mostly on the people wandering in and out of the 
building. "I don't know how long we are for this street," I sigh as an 
impossibly well-oiled couple in complementary shades of Gucci glances at 
us and promptly retreats back up the street. "We're white trash, and 
everybody sniffing around is Eurotrash."

Eventually, Vincent and Jennifer, bursting with curiosity, go over to 
check out the property. Their cover story is they want a pied-a-terre 
for his parents. They return a few minutes later with a thick folder of 
floor plans and prices. "They've already got offers on the 
one-bedrooms," Vincent says, dumbfounded. Then he adds in a confidential 
hush, "You know, Ava died." I'm drawing a blank who Ava is.

"The old lady across the street," he says, pointing to a massive 
structure twice the size of his brownstone. "You'd always see her 
outside sweeping."

"That's too bad," I say, pausing a beat before adding what I know he's 
waiting for. "So what's happening to the building?"

Jennifer is trying to be dignified. "A woman has died. Vincent, this 
isn't right to talk about."

He and I shrug. "I'd like to sell this place and buy that," he says, 
eyeing the building with the same appreciative twinkle that old guy had 
when he surveyed my rack.

I feel sorry for the old ladies of Carroll Gardens. The minute any of 
them gets a cough, you can almost hear our speculative palms rubbing 
together in anticipation.

We're doing a brisk stoop sale business when a khaki-wearing poor man's 
Jeremy Piven bounds energetically from the condo. He looks dismayed at 
our assortment of fondue sets and Pez dispensers, and the sight of Lucy 
in ornate sunglasses and me in a $5 pink wig.

"You should give me a cut," he huffs, "because I own that building."

We have spent the afternoon depreciating property values. Which, given 
how the last few years have gone, is rather satisfying.

Sharon and I immediately begin making plans for the next open house. 
They involve radios, lawn chairs and wine coolers. Sadly, our plans 
never come to fruition -- almost all of the units go into contract the 
first weekend.

I have been feeling particularly class-conscious ever since Lucy started 
kindergarten a few weeks ago. Her school has lost its Title I funding 
this year because not enough underprivileged kids go there anymore. 
What's the side effect of an influx of wealth? Your school relies on 
parents to supply basics like paper towels and markers, and the music 
programs you had last year are no longer available.

In their stead, a stream of transplanted young Manhattanites and their 
helicopter moms whirr around the schoolyard. I watch newcomer parents 
converge in a clusterfuck of anxiety and fret that their Fletchers and 
Bathshebas aren't being challenged enough by the kindergarten 
curriculum. The moms who grew up in the neighborhood, meanwhile, clump 
together at the gate and smoke. Across the jungle gym, the two tribes 
eye each other suspiciously.

"If the parents want extra programs," says a reed-thin woman who swapped 
her Greenwich Village condo for a brownstone, "why don't they do what we 
did at Ajax's old school and have every family kick in two or three 
thousand dollars at the beginning of the year?"

I am standing outside at morning dropoff with several other 
demographically challenged parents. A strangled sound rises unbidden 
from the back of my throat.

"I mean, it would be voluntary," she hastens to add.

Later, I'm in the park with my friend Geri and our spawn. I'm talking 
about the weekend and the million-dollar condos and the fancy new crop 
of families at the school when I find myself off on a rant against rich 
people and their designer diaper bags that starts from my toes and 
gushes forth like a Vesuvius of resentment. "These douchebags come in 
and ruin everything. What is it?" I ask. "Why do they make me so crazy?"

Geri, with all the wisdom of the Dalai Lama if he'd grown up over a bar 
in New Jersey, fixes her gaze on me. "Do you know any rich people?" she 
asks.

I ponder this. I have a suspicion a few of our friends are wealthier 
than they let on, but actual, three-kids-in-private-school, 
wheeeee-I-have-so-much-money rich? "A few," I tell her.

"They're all assholes, right?" she replies. I have to admit she has a 
point there. "You don't get rich enough to buy a house in this 
neighborhood today unless you're fucking people. So when you see 
somebody pushing one of those $800 strollers, you know it was paid for 
by fucking people. That," she says with a flourish, "is what you hate." 
I'm sure there are very decent people with expensive strollers out 
there, but I find Geri extremely validating.

Our family is on the A train again, en route to an appointment with Lara 
the broker. "I want my borough back," Jeff says.

"That's why there are five," I tell him. "One of them's bound to pan out."

The last time we were here, Jeff and I zipped around in my 
mother-in-law's car on a sunny Sunday, listening to the radio and 
feeling good.

Today, I am less certain what we're doing here. Lara shows us two 
apartments in Park Terrace. Dark. Tiny kitchens. Grim. We know the 
drill. The pizza we have for lunch, however, is as good as anything I've 
ever tasted in Brooklyn. Afterward we take the girls to the park, where 
they run around giddy at the novelty of a simple expanse of grass.

"If we could have this," Jeff says, "it might be worth it. We could have 
picnics. We could build snowmen here in the winter." He is open to the 
possibility of a place with some wide-open spaces. I am ready to claim 
considerably less.

A few weeks ago, I bought a latch lock for the bathroom. It's simple 
enough to brace my feet at the door to keep out wandering offspring and 
distracted spouses if I'm sitting on the toilet, but an uninterrupted 
shower has, until this point, been impossible. One short trip to the 
True Value and four dollars later, and I have bought back some measure 
of my modesty.

The bathroom is, in other people's homes, a sanctuary. In ours it's an 
asylum. It's the room Jeff retreats to when he needs to do a freelance 
job and I'm dying to watch a movie. He hauls in a TV table, puts down 
the seat, and gets to work. It's where I go to break down when it all 
gets to be too much, this stupid windowless room with an unholy water 
stain on the ceiling and a ghastly brown linoleum floor. During the 
girls' birthday party, when I got a work-related call, I flipped on the 
vent and threw my weight against the door, bravely attempting 
conversation while fighting off a horde of five-year-olds with full 
bladders thumping on the other side.

In 1950, the average American home was a modest 983 square feet. In 
1970, it was 1,500 square feet. Today the figure looms close to 2,500 
square feet. I don't need my own wing. When I cruise through New Jersey, 
I shudder at the houses on steroids dotting the landscape. I see 
circular drives and enormous windows, revealing the chandeliers and 
grand staircases you can see all the way from the turnpike. They don't 
look like homes. They look like somewhere to have a prom.

But the limits of our space, the blatant absence of privacy, they're the 
things that make me feel small and self-conscious when our friends with 
real homes come over. Beatrice sleeps in the crib an arm's length away 
from our bed. Lucy is a few feet farther away, in her 8-by-12 room with 
no door. We have four human beings vying for space in this tight yet 
wide-open unit.

We have plenty of company. There's the couple we know in a tiny 
one-bedroom who sleep on a futon while their twins share a loft bed. 
There's the family who moved the fridge to the living room to make space 
in their cramped kitchen. There's the divorcee who lives with her mother 
in the apartment she grew up in. In other cultures these arrangements 
are what pass for efficiency and intimacy. This, by the way, is why we 
couldn't cut it in other cultures. We all stay because we can't afford 
to buy and we can't bear to leave. But who among us would mind not 
having to hide in the toilet for a few minutes of time alone?

On Monday, I call Roz, the mortgage broker. The last time I spoke with 
her, I figured our search would be challenging but not interminable. I 
thought she'd be helping us put together a mortgage in a matter of 
months at the outside. That was two years ago.

I update her on our lives and savings and tell her, "We've zeroed in on 
a neighborhood we like. I think we'll be able to make an offer on 
something soon. Tell me what we need to do."

"I'd recommend doing a no-doc mortgage for you," she says. I have never 
heard the term before. No-doc I learn, is short for "no documentation."

If subprime loans are the catnip of borrowers with spotty credit, 
no-docs -- and their slightly more forthcoming kindred, stated income 
low-docs -- appeal to people with good credit but fluctuating income. 
That's why they're also called "Alt-A loans" -- alternatives for people 
with A-level credit.

Lenders, as a general rule, want to do business with people who draw 
steady paychecks from a verifiable employer. Jeff has lost a job in the 
past year, freelanced, and is now working as an in-house independent 
contractor. I have a half-time job and I freelance. We're financially 
stable, but on paper, we appear all over the map.

Where there's money to be made, however, the lending industry will find 
a way. With the particular form of no-doc Roz recommends, we wouldn't 
have to provide the banks with the cruel minutiae of our careers, just 
our incomes and credit history. In exchange, we'd likely pay a slightly 
higher mortgage rate. It's a lending version of "don't ask, don't tell."

I am choosing to look at this as the industry's way of giving those of 
us who aren't traditional nine-to-fivers a shot at home ownership. If we 
do it right, it'll all come down to what we have in the bank, which 
still isn't all that much. Roz also tells me we should aim to put 10 
percent down. No less, because most co-ops and condos won't accept it, 
and no more, because we don't have it. The median first-time homeowner 
down payment this year, meanwhile, will be just 2 percent.

"I don't like to waste my time," Roz declares in a firm tone, and I can 
feel breakfast rising in my throat. Then she adds, "I don't think I'm 
wasting my time with you. I wouldn't talk to you if you couldn't do it. 
You can." I don't know what will come of any of this, but it occurs to 
me that this woman may have changed my life.

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