Homeownership Prison: Why Your Mortgage Is a Set of Chains

Homeownership Prison

The desire for homeownership in America has reached cult-like proportions. The benefits of homeownership are loudly trumpeted to anyone who will listen. Renters are put down or chastised by the homeownership crowd for “throwing money away” on an apartment.

Most of all, homeownership in the states has become a signal of status. A person who doesn’t own their own home is considered lower class.

(Note: when most Americans talk about “owning a home” they really mean taking out a huge mortgage to finance their home, typically 80% or more of the purchase price. The bank is really the owner of the home, they just get to live in it. See the 2008 housing crisis for proof of this concept.)

J.D. Roth over at Get Rich Slowly recently took a look at how American spending has changed over the years, using data and graphics from a recent NPR Planet Money article.

The results are striking:

Homeownership - 1949 vs 2011

Source: Bureau of Labor Statistics Credit: Lam Thuy Vo / NPR


The relative cost of food has plummeted 61.75% and clothing another 69.23% due to advances in technology in the last 50 years. Instead of reaping the benefits of these savings, Americans have decided to supersize their homes. The relative cost of housing is a staggering 157% of what it was 50 years ago. In the same period, the average size of a new home has ballooned up 1000 square feet.

Remember how advancements in technology are supposed to decrease costs over time? New technologies should make the material and labor costs of building new homes go down. Instead, the proportion of American budgets dedicated to housing has only increased.

Well, you might argue the increase is attributable to home values going up. Our houses are worth more, so of course how much we spend on them has gone up.

But is this real value? Or the effect of having tons of debt in the market artificially driving up price? Does it make sense that while everything else in life (think electronics, consumer goods, telecommunications) has gotten better in quality while at the same getting cheaper, the price of housing is stubbornly eating up a greater and greater portion of our lifestyles?

The housing market is anti-agile because it resists technological advances and props up artificial scarcity.

The Secret Costs of Homeownership Your Realtor Won’t Tell You About

Paula Pant of Afford Anything put it better than I can in a post about her changing spending needs:

Holy moly, nothing changes your spending needs like maintaining a house. What a money pit!

The mortgage is the least of it. I pay property taxes, homeowner’s insurance, water and trash. I need a lawnmower, a sprinkler system, several ladders, a seed spreader, an aerator, Termidor, a power-washer, weedkiller, lawn fertilizer, tree pruning, rakes, hoes, shovels, and that long tool that helps you clean the gutters. I need a drill, a wrench set, caulk, spray-foam and weatherstripping.

And that’s just routine maintenance … don’t get me started on things that break.

Keep in mind Paula is a proud property owner and landlord herself, and hardly an anti-homeownership booster.

The benefits of homeownership are greatly exaggerated. The truth is homeownership in the United States makes people slaves to their homes. Mortgages become a set of chains that ties a homeowner to a specific location, working a job he might not enjoy in order to act as indentured servant to his bank lender.

We can do better than this as a society.

“We Wish Like Hell We Had Never Bought”

The good news is people are beginning to opt out of homeownership prison. People are realizing that the extraordinary costs of owning a home, monetary and otherwise, are interfering with their reasons to live an agile lifestyle. Owning a home is yet another way we sanction investing in junk instead of investing in yourself.

The Atlantic ran a chilling feature in March of 2012 showcasing the stories of real people who waded ignorantly into the housing bubble before it collapsed under the weight of bad loans.

The first story caught my attention. It is the source of the quote above. A young, educated couple pulling a combined $100,000/year realized too late that the math on their home purchase didn’t work.

Their home? A 1,100 square foot house in San Jose, California.

Not exactly Wayne Manor.

Here’s the advice they had for young couples considering homeownership:

And with stagnating wages, high unemployment, and job mobility — what if your company picks up shop and tells everyone it’s time to move to North Carolina or lose your job? — as daily concerns, the last fucking thing a young couple should be thinking about is buying a goddamn house.

Sounds like agile advice won the hard way.


If you bought a home during the run-up to the crisis, I’d love to hear your thoughts, good or bad. You can reply in the comments below or you can find me on Twitter.

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