In a cruel hoax, the capitalists are singing “home ownership” as a solution to the terrible insecurity their system creates daily. President George W. Bush is the current lead for the “Culture of Ownership” band. But beware the “Enron” in their siren song!
The insecurity on which they play is justified. At least one-third of U.S. jobs are highly insecure today, almost twice the 1973 proportion. And who wants to be at the mercy of a landlord?
Owning one’s home is not like owning capital, i.e., exploiting labor. But the business of selling homes is all too much like the business of selling stocks, with the associated speculation, loans and fees.
As with stocks in the 1990s, house prices appear to be defying gravity. They climbed 9 percent in the U.S. in the past year, despite a downturn in the economy. This is particularly extraordinary, considering there were over 10 million vacant homes and apartments.
In an unsustainable trend, house prices in nearly all rich capitalist countries in the ‘90s outpaced economic growth, inflation and income year after year – with two big exceptions. In Japan, the bubble burst, and house prices have fallen to less than half their 1990 peak. In Germany, they have dropped 30 percent since 1992. People are holding mortgages often greater than their homes are worth, resulting in a form of indentured servitude.
There are signs of an “Enron” in the U.S. housing market. With Enron the capitalists mobilized their forces – including their bankers, accountants and brokers – to artificially inflate the company’s worth. “Home appraisers say their mission is in jeopardy,” The Wall Street Journal reported last year, “and the risk to the market is great, because they’re under pressure to raise prices as high as possible so brokers and lenders can make more and bigger loans and collect bigger fees.” The Journal goes on to quote Mark Vitner, an economist at First Union Bank, “‘The upward spiral of prices becomes self-reinforcing.’ Some believe home prices are beginning to act like technology stocks before the bubble burst last year, and Mr.Vitner says they’re moving up so fast that any value seems reasonable…. Rep. Jan Schakowsky (D-Ill.) has introduced a predatory lending bill that includes a provision making it illegal for lenders to coerce appraisers.”
The New York Times recently reported that defaults on mortgages for low and moderate-income families in the N.Y. region have soared, from 3 percent in 1992 to 11.7 percent in February 2002. The cumulative impact of racism – in hiring, firing, pay, predatory lending, law enforcement, etc. – was particularly evident. “A kind of default and foreclosure belt snakes through predominantly Black neighborhoods,” the Times reported.
Even home “ownership” statistics (67.7 percent in 2001) are misleading. Two-thirds of home “owners” have one or more mortgages outstanding. And in this society, the capitalists’ claims – commonly known as loans – have legal priority, be they in corporate assets (as Enron showed) or home equity.
If a “homeowner” has paid off 99 percent of a mortgage but falls behind on final payments, the lender can take possession (foreclose), evict the home “owner,” sell the property to satisfy the debt and collect punitive fees, leaving the “owner” with little or nothing. And with valuations rising, regressive property taxes are climbing. Tax liens can also lead to loss of home.
It will not take a big rise in unemployment or interest rates, or a big fall in home prices, for much of the $6 trillion in outstanding U.S. mortgage debt to become unpayable. The question then becomes on whose terms will the debt not be repaid, the capitalists’ or the working class’? The working class will cancel debts to capitalists and will make certain that production – and existing housing – are to meet human needs, not for profit.
The truth is that there are no individual solutions to capitalism’s problems. By reducing mobility, homeownership can even make life harder for workers at a time of tremendous “churning” in the U.S. “labor market.” (Friedrich Engels’ work on “The Housing Question” remains a classic.)
Only class struggle and a socialized economy can bring about the economic – and housing – security all should enjoy. Real solutions will come from “investing” in the Communist Party and the class struggle. This includes the struggle against evictions and foreclosures, and for quality and affordable housing for all, including for our youth.
The author can be reached at firstname.lastname@example.org