There are many ways to look at the housing crisis, but I can offer a personal perspective. In 2020, I bought a home. Since then, it has appreciated in value more than the cost of the house I purchased in 1987. And my home is less than two-thirds of the median home price in Minnesota. Not extravagant.
Think about that. It is not a sustainable trajectory for housing prices. At that rate, housing market collapses are unavoidable. Remember the collapse of 2008? The important question in housing is not whether there will be another collapse, but when.
But it is not only housing prices. Climate change is reshaping the insurance markets. With the increase in severe weather, as predicted by climate scientists, insurance rates for homes and commercial properties are rising. And it will only get worse as our planet continues to warm — due to our heavy use of fossil fuels.
Only a fool fails to recognize the impacts of climate change. You can see it and feel it in rising average temperatures, increased extreme weather events and rising food prices. As a result, you are paying more to cool your home, to put meals on the table, and to insure your home.
Hatred of immigrants will also impact housing creation and maintenance. The construction sector relies disproportionately on immigrant labor. Good luck getting your new roof installed after the next extreme weather event.
Housing has always benefited me and some in my generation. We were born during a time of relatively low costs — homes, building sites and construction materials were less expensive. Additionally, the continued rise in housing values was a benefit, yielding greater wealth — at least on paper.
Sadly, for homeowners, the increased value of their homes created a sense of financial well-being. So, many people spent more in other areas of their lives. That is what destroyed the financial lives of many Americans in 2008. As the value of their homes declined, their debt was high. As jobs disappeared, many were left with little to nothing.
Financialization played a central role in the 2008 housing collapse. Lenders loaned money to people whose ability to make their monthly payments was marginal. That largely spared Minnesota from the worst impacts of the 2008 collapse. However, Minnesota is now at greater risk due to increased insurance costs. And extreme weather events will be a problem everywhere.
But here is a significant factor that housing analysts rarely consider: Unbridled inequality. We are building housing that few can afford. Like never before, the rich are getting richer and the poor are getting poorer. Your community might appear relatively affluent but few actually own their homes, their vehicles or — in some cases — their couches.
Too many Americans are using debt to pretend they are still middle-class.
As Wall Street takes an increasing percentage of everything you do — Lyft, Uber, credit cards, DoorDash, online purchases, and most everything else — wealth becomes concentrated in fewer hands. It is a long list of services and goods that now siphon money away from families and communities.
Our communities are changing, and our democratic processes are failing. Enormous wealth in the hands of a few and pervasive debt for everyone else is not a formula for a strong democracy. Since 1980, Wall Street has been winning while working families struggle.
If you have a mortgage, you don’t own your home. The bank owns it, and it will be taken away when you fall on hard times. Many Americans learned that lesson the hard way in 2008. Homeownership through a mortgage is just another form of renting.
The solution offered to young families: Don’t live beyond your means. Save when you can, buy smaller, less expensive homes and don’t take on debt unless it is necessary.
But that advice is what we used to say when we lived in a democracy. The old rules may not apply when policies exclusively serve a wealthy elite.
Since the 1980s, homelessness has been a sign of a failing democracy and failed national housing policies. For many, the seeming collapse of democracy appears to be unfolding in months, but it has been years in the making. Democracy is failing for many reasons, but primarily, politicians spend too much time courting wealthy donors and too little time listening to the American people.
Now, housing stability will deteriorate alongside financial stability. Too many Americans are just a few paychecks away from losing their home.
From now on, we are in uncharted territory.
Keith Luebke co-directed the Welcome Inn during the late 1980s, was executive director of Partners for Affordable Housing from 1997 to 2006 and was director of the Multi-County Housing Authority for four years. He is currently retired.