Monday, March 22, 2004

Hero Homes

We’ve been seriously looking for a new place to live for the past couple of months. The local elementary school is over crowded, dirty, and uninspired. We lack an elevator, a driveway, a dishwasher, a backyard, and adequate laundry facilities. We think life could be easier somewhere else.

The apartment prices in our neighborhood start at $350,000 for a one bedroom, so we started looking in New Jersey within an hour commute of the city and with average to good schools. We zeroed in on one town that has the good schools and the commute. Though most houses in the town are crazy expensive, one part of the town has some broken down Cape Cods built after WW2 for the returning heroes armed with the GI Bill of 1944. We thought we would buy one of the broken down hero homes.

However, so did everyone else. We waited on line with the other desperate families to look at Sunday open houses. We even bid on four sad houses, one by the railroad tracks, one that only had 1-1/2 bedroom, one had no yard, and one had no place to eat. And we were outbid at every turn. One guy put down all cash and waved the inspection, because he planned on knocking it down. One family bid $100,000 more than asking price. All of these homes were on the market for less than three days, went far over asking price, and had 10 or 25 bids.

We’re not terribly upset. We’ll come up with some other solution. We could rent somewhere else or stay and have our babysitter help us more. The local school, I’m sure, won’t turn my kid into a drug dealing drop out in a year or two.

I bring up our sad story not for pity, but because I think we’re in the midst of a serious housing crisis that is being missed by the mainstream press and politicians. Housing prices have gone up 28% in five months. Average housing costs in the metropolitan region must be at least $400,000. Cops and firemen and teachers have no chance of finding a home an hour, even two hours, out of the city. This problem has hit almost every major city this year in part because of low interest rates, high demand, and Wall Street bonuses. The authors of the The Two-Income Trap point to the inclusion of women into the workforce and the competition for good schools as contributing to this problem.

What is to be done? People need shelter. The only new construction in the area are developments with enormous, jacuzzi-filled mansions. Instead, we need to build another Levittown. Towns with smaller, affordable homes on small chunks of property. Or two family row houses with common backyards. We need to reclaim the towns with bad schools, so that the middle class can consider moving there. A combination of government and private investors need to start building a new generation of hero homes.

Here’s some stats from the The Two-Income Trap:
Over the past generation, home prices have risen twice as fast for couples with young children as for those without kids. Mostly because people with kids have less choices. They can only move to areas with good schools.

Since the mid-70s, the amount of the average family budget earmarked for the mortgage has increased a whopping 69% (adjusted for inflation. At the same time, the average father’s income increased less than 1%.

Since I’m feeling a bit nostalgic for Levittown and other post war communities, here are some links on the subject:

Great photographs of Levittown in the 1950s and interiors of the homes.

The impact of the GI Bill of 1944 on post war America.

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