Skip to Content
Community Voices

Living (and paying for) the American Dream

By Drew Ross | 07/22/10

My friend is producing a documentary on the myths of real estate in America. He will have an easy time debunking the classics like "real estate always goes up." I bought my house this past December and better understand his point. I see a few other parts of the American Dream that might need revamping.

For starters, when we sign the closing papers on a house we say, "We bought a house." Though inexact, this is healthy. Since most of us put less than 20 percent down its best to avert our eyes from the interest we pay each month to our collegial co-owner, the bank. Also, it would be painful if not sound awkward to say the truth for 30 years, "I'm still paying for my house."

Perhaps the most significant difference between renting and paying large amounts of mortgage interest is that you get the privilege of doing as you please with your humble abode.

You can paint the shutters Viking Purple.

You can undertake as many home improvement projects as you like at one time.


And, most honorable, you obtain the rights to pay your property taxes directly to the government.

No more middle man. No more hidden costs. They all come directly out of your wallet.

I had paid bills on and attempted to improve a few pieces of property for the bank in the late 1990s when I moved and divested. I enjoyed my eight year holiday as a renter, never stepping foot once in a Home Depot.

With rain comes a reminder
If I forgot how perverse it is to work for the bank, these past weeks of torrential rain have reminded me.

We live on a hill with old retaining walls in our backyard. After the Big Flush (two inches of rain in as many hours), we found a corner of our terrace had been transported downhill. This past weekend I repaired the wall.

I wouldn't do this kind of work if you paid me. But because I "own" the house, I have the simple choice of paying someone else to do it or doing it myself.

While I was bent over in the trench, sweating profusely in our fourth 90/90 day of July (temperature/humidity), I realized the bank never asked me if I would do this for them. The bank only assessed if I could pay the interest and insurance every month for 30 years.

Now I own a home. Now I get to do the work and pay dearly for the chance to do it.

A daylong marathon, an exhausted stupor
Most strange, I enjoyed it. At the end of a daylong marathon under threatening skies, I swelled with a sense of accomplishment. My wife was proud of me and wanted to take pictures. She said I looked like a 19th-century Irishman on the railroad crew.

As the tornado sirens wailed that night and torrential rains again flooded the land, I slept in a sound, exhausted stupor. I awoke the next day sore in every muscle and still proud of my work.

I limped out to inspect my handiwork. Once I saw it was still standing, I admired it. It's a steep price to buy into this homeownership myth, but it is home.

Drew Ross is a native Minnesotan and a longtime editor and writer. He is the author of "Walking on Sand: The Story of an Immigrant Son and the Forgotten Art of Public Service."

Comments (4)

Submitted by Richard Schulze on July 22, 2010 - 7:14am.

This whole problem exists because both home buyers and the government decided that a house was an investment vehicle rather than a place to live.

Well-intentioned programs over the better part of a century have enshrined that notion as an unassailable right. In recent decades, the pace has picked up in terms of inventing ever more clever ways for every more people to pay too much money for a house.

By making the government the de-facto lender or co-signer, the real estate industry externalized risk and internalized rewards. There are two ways to make houses affordable -- low interest rates and low purchase prices. Either one works equally well for the buyer, who cares only about his or her monthly payment. However, the profits of builders, real estate agents, and title companies are all based on the selling price, so it's been in their interest to keep price high, but interest rates down. We've also provided various tax breaks (mortgage interest deduction) for home ownership that also enable the purchase price to be higher.

The coming second dip in the housing market is nothing to be afraid of. It's the honest necessary realignment of supply and demand and the necessary honest recounting of bank balance sheets.

Submitted by myles spicer on July 22, 2010 - 8:46am.

Not to worry...if I have learned anything about real estate (with 50 years of home ownership and many investments) -- it is a cyclical market with continuous ups and downs.

So, now you not only have the pleasure (and tribulations) of home ownership, one day (in an up cycle) you will also enjoy the profits of a good investment.

Submitted by Richard Schulze on July 22, 2010 - 10:00am.

Anyone who believes that housing is on the rebound, and that now is the time to buy, should take a very hard look at the numbers. There are 140 million personal residences in the US. Today, there are 19 million homes either directly or indirectly for sale. According to a survey by Zillow.com, a real estate appraisal website, 5 million homeowners plan to sell on any improvement in prices. Add to that 4 million existing homes now on the market, 1 million new homes by companies like Lennar and Pulte Homes, and 1 million bank owned properties. Another 8 million mortgage owners are late on their payments and are on the verge of foreclosure, bringing the total overhang to 19 million homes.

Now, let’s look at the buy side. There are 35 million who are underwater on their mortgages and aren’t buying homes anytime soon, nor are the 35 million unemployed and underemployed. That knocks out 50% of the potential buyers. There are 80 million baby boomers retiring at the rate of 10,000 a day. Assuming that they downsize over time from an average 2,500 sq ft. home to a 1,000 sq. ft. condo the total shrinkage in demand is 1.7 million average sized homes.

You can argue that the following Gen-Xer’s are going to take up the slack, but there are only 65 million of them with a much lower standard of living than their parents. Throw in the disappearance of state and federal first time buyer tax credit. You can count on a jump in long term capital gains taxes and state and local property taxes, further diminishing property’s appeal. Add it all up, and there is a massive structural imbalance in residential real estate that will take at least a decade more to unwind. A second down leg in the real estate market seems a no brainer to me, as is the secondary banking crisis that follows.

Submitted by Alicia DeMatteo on July 22, 2010 - 12:16pm.

I bought my first property about five years ago, when all my wise elders assured me real estate prices and interest rates would never be that low again. Ha!

But I still can't say I regret it. I had saved up a sizable downpayment, didn't buy above my means, and know that my monthly mortgage payment is less that what I'd be paying in rent for something similar.

As for the "sweat equity" of homeownership, I'm going to apply a theory my mom once told me about having children: if you try to work it all out on paper, it will never make sense financially. You have to do it because you know you'll love it."