As a working class woman in my 50s, a paid-off house is central to my plan for survival. But the generations that come after me are not going to have this available to them.
Homeownership is one in a long series of supports being kicked out from beneath the poor and working classes – in fact, we can include about the bottom half of the middle class in this predicament as well.
We lost pensions a long time ago
Social Security isn’t remotely enough to live on. Most of us are not a whiz with picking funds for our 401(k)s even if we are lucky enough to have a job that offers one – and to earn enough money to be able to fund it. Student debt was not an issue for my generation but it prevents many younger people from being able to afford a down payment.
If you have a paid-off house, though, you at least have a hedge against actual homelessness. You still have to cover property taxes, insurance and maintenance, but given good planning and some luck, you will always have a roof over your head. You can even help cover your house expenses by bringing in a roommate or boarder if you have to.
I bought my first house when I was quite young
My first husband and I bought a charming 1925 arts and crafts bungalow for $37,500 in 1990. Our interest rate was 9.5 percent, which sounds terrible now but was thought to be perfectly normal back then. We had an FHA loan, which meant we needed to put down about 3 percent. That was way more money than we had (!) so we borrowed it from our parents.
Our monthly payment, including property taxes, insurance and (I’m still mad about this rip-off) private mortgage insurance ran around $400, about $25 more than what we’d been paying to rent half a duplex.
We sold that house for $47,500 and bought House No. 2, a boring 1970s quad level in a nearby town with very good schools, and I’d have stayed there at least until my kids were grown except that my first marriage ended. No matter what I cut, I could not quite cover my living expenses there.
So I used my equity to purchase House No. 3, a cute 1950s place that was much smaller and less expensive. It was just large enough for a single mom and two teenagers, but when I remarried, my husband and I got bitten by the Old House Bug and we picked up our current 1897 house where we still live.
The interest on House No. 4 is down to less than a dollar a day. Sometimes I bring up my credit union’s website and just enjoy the beautiful sight of my $27 interest payment. (You think I’m joking but I’m not.)
We still owe a little more on House No. 3, which will take us several more years to pay off. Having two paid-off houses at my husband’s retirement is what will, we hope, keep us off the street or having to depend on our children. (My grown son happily rents House No. 3, and if he ever wants to move, we’ll likely sell it.)
You can’t easily replicate this now
Few of today’s young people will have a house paid off when they retire; fewer still will own two. I wouldn’t have two houses either if I had been able to sell No. 3 in 2008. It took some fancy footwork to manage not to lose that house entirely.
I’m Gen X. I cannot imagine what my old age would be like if I had to plan to pay rent forever. I don’t see how today’s young people are going to manage it. If something doesn’t change, we will see vast armies of gray-haired Millennials, followed by Gen Zs and Gen Alphas, living in tents.
Living on the street is bad enough for young people. It’s worse for older people. I expect homelessness will be the real leading cause of death for future generations.
Housing is too expensive
I live in central Illinois, where houses are still cheap-ish compared to much of the country. The flip side of this, of course, is that my houses will never be worth nearly as much as the houses in most parts of the country. If I sold both of them, I still would not make enough to purchase a house in most other parts of the country.
Younger people might not realize this, but high rates of homelessness aren’t a normal or inevitable condition. Until the 1980s, homelessness was uncommon. Now it’s rampant and getting worse. This is not a matter of individuals making poor choices, unless you seriously believe that suddenly, millions of people began making much poorer life choices than people ever had before.
No, this is a systemic problem. To fix it, politicians would need to do something and they are too busy being influencers now.
We could start building affordable housing anytime we want to. We could change the tax laws to discourage investors from purchasing large numbers of properties and to encourage homeownership anytime we want to. We just don’t want to. We’d rather do what we always do in this country: Blame the individuals.
I clearly see that my ability to purchase a so-called starter house in 1990, when I was still in my early 20s, will have a dramatic effect on my well-being when I’m in my 70s and 80s, should I be fortunate enough to still be here then.
For future poor and working class Americans, though, things don’t look good.
About Michelle Teheux
I’m a writer in central Illinois. If you like my work, subscribe to me on Substack or Medium. My new novel is The Trailer Park Rules. And yes, I accept tips via Ko-fi.
My new novel, The Trailer Park Rules, looks at poverty and income inequality through the eyes of the residents of a fictional trailer park.