This editorial might be of interest to those following the housing meltdown as it melts down the rest of the economy here in Iowa, in the U.S., and around the world. Yes, I know it is a year old. But, unfortunately, much of this is still current.
Originally published in the Iowa City Press-Citizen
September 23, 2007
By Sean Scanlan
Even if you are safely housed, you may suffer from a worsening case of homesickness. Consider the following: The ongoing Darfur conflict has displaced more than 2.5 million people. More than 1.1 million Iraqis have been displaced since 2003. Hurricane Katrina devastated the Gulf Coast, displacing an estimated 1.1 million.
Closer to home, in Chicago, the subprime mortgage crisis sent foreclosures literally through the roof. Writing in the Chicago Tribune, John McCarron reports than urban foreclosures in 2006 were more than 10,000. But in the suburbs, the holy grail of the American dream, there were nearly 19,000 foreclosures.
Even closer to home, Iowa has its own housing crisis. When I started to write this guest opinion, Iowa was ranked as the ninth most affected state in the subprime collapse. By the second week of September, Iowa moved up to fourth, according to Iowa Public Radio. Last year, 1 in 2,700 Iowa property owners faced foreclosure — up 9 percent from the previous year. Losing one’s home is not something that affects somebody else in a foreign land, it happens to your neighbors, to you, possibly to me. And something must be done.
These statistics are part of the story of American homemaking and building that goes back to World War II. This story has two sides to it. The mythical side that says if you don’t succeed, it is your fault. The other — which is based on recorded documents and personal experiences — says that opportunity is not handed out equally and systemic profiteering ruins actual lives. Because myths have enough presence in popular culture and in the marketplace, I will focus on the less well-known side of the story. The central plot of this story is the alliance between the for-profit housing industry and government (local and federal) that altered laws, infrastructure and housing design, eventually creating a monstrous machine in whose belly we now find ourselves.
Historical context is important. After World War II, the demand for housing was so great, reports historian Kenneth T. Jackson, that retired trolley cars, large ice boxes and surplus grain bins were sold as homes. To solve this crisis, the Veterans Administration mortgage program and the FHA combined with businesses to help families move into their own homes.
Sounds good so far. But four decisions altered the very look and feel of the American home:
• First, house builders promoted factory production techniques that stripped away the need for skilled labor.
• Second, the government did not require massive building companies such as Levitt and Sons to build roads, schools, sewers or sidewalks.
• Third, the VA and FHA backed loans for single-family homes, not apartments, and rarely in urban areas.
• Fourth, house loans were largely restricted to white males.
If these policies did not include the elderly or minorities, if they isolated families and women, if they destroyed public transportation and urban neighborhoods, at least they provided many millions homes on a large scale.
Iowa City and ‘in loco parentis’
The farm crisis of the 1970s shocked the housing structure of Iowa City. As the university’s enrollment grew, the state’s coffers dried up. With no money to build new dorms, local housing businesses approached the school with a proposition: Get rid of the “in loco parentis” rule, and we will take care of your housing problems.
For example, the last university-built dorm was Slater Hall — that was 1968. The ramifications of this decision have changed the shape of Iowa City’s homes, architecture and streets. It has changed people’s lives, whether these people are students who now live in “undergraduate ghettos” of converted single-family homes or families who have been forced out of these once quiet and safe neighborhoods.
The rise of undergraduate apartment culture has changed the feel of Iowa City, and reciprocally, those feelings affect the future shape of this city. The current housing crisis is mainly a homeowner problem, but we can see how university students are implicated in the mess.
This crisis does not lead to nostalgic homesickness for a lost, yet better, past. This is a structural homesickness. Actual housing practices (redlining, unfair mortgage rates, restrictive covenants, complex rate adjustments, unfair landlord-tenant agreements) and actual short-term government policies (FHA loans to builders but not for infrastructure) have combined to deface the connections between where people live and how they live.
Architect Dolores Hayden explains that for the past 50 years, federal subsidies for accelerated depreciation for commercial real estate and subsidies for interstate highways have laid the groundwork for the catastrophe of “sprawl” including, for example, abandoned Wal-Mart and Menards stores. These shortsighted decisions do help somebody: big businesses. These decisions have also created a contest between residents who wish to enjoy the suburban city and developers who seek to profit from them. This contest ruins communal ties; it does not have to be this way.
Solving the current crisis
The current subprime foreclosures are part of the legacy of 1980s banking deregulation — a real-estate speculation debacle that resulted in 1,000 bank failures and $150 billion in losses. Who should we blame? John McCarron warns against placing all of the blame on defaulting borrows.
How about some proof that business is really to blame? Last year, Ameriquest Mortgage Co. entered into a $325 million settlement with the attorneys general and regulators from 49 states because they pleaded guilty to predatory lending practices such as hidden charges and falsified loan applications. The machine of business and government are “gaming” the system because they made the system.
What should we do? McCarron has some good ideas:
• First, mandatory mortgage counseling.
• Second, full disclosure of all costs to the borrower.
• Third, cap rates.
• Fourth, make all mortgage company rates and financial statements a matter of public record.
In addition, we must do one essential task: plan our neighborhoods and our city for long-term, balanced and equitable growth.
Recently, the Iowa City Council has taken up the idea of long-range planning. I applaud this drive, and I hope that residents have a voice in the actual process of reconfiguring our hometown. But, I am worried about whose interests will ultimately rule the day. Specifically, who will be helped and hurt by the development along South Gilbert and Sand Road? We’ve already seen how road widening in that area may cause more problems than it solves.
The majority of blame for the current housing crisis rests with the rapacious housing industry that builds without foresight, lends without scruple and profits without personal ethics. The collective feelings that produce homesickness enable us to yearn for something better, not for the homes and the practices of the past (surely our lending practices are better than the misogynist and racist practices of the early 20th century).
We must demand homes for young Iowans, old Iowans, new Iowans, especially those who face barriers to gaining their own home. Let’s leave behind the myth that says failure in our democratic society is due to not working hard enough. It takes more than one person’s hard work to reinvent the idea and place of home. It requires a collective, communal effort to change the machine, so that fairness and profit are in balance. Within such an effort is a story worth following.
# # #