Housing in a Debt Free Society

This essay is a part of the Debt Free Society Series.

If we seriously wan to work toward a debt free society, I think there's no better place to start than looking at, and re-thinking the biggest debt in many lives: The Home Mortgage

The issue

Typically, a home means taking out a 30-year mortgage (if you are smarter, 15 years), and usually people will buy the payments, or calculate the maximum payment they can afford and purchase the biggest or nicest house has that maximum payment tied to it. From here, the goal is to maintain a prescribed "curb appeal," because my house is my greatest asset, and with so much money tied up in it, that resale value must increase over time.

We cannot underestimate the importance of the phrase "my house is my greatest asset." Many near-poor Americans, as 63% do not have the savings to cover a sudden $500-$1,000 emergency, may be counting on a reverse mortgage or the sale of their home to cover retirement. Or in nearer terms, on a HELOC loan (also called a second mortgage) to cover large expenses. Many freedom-limiting policies at the local level, like restrictions on gardening or rainwater collection, are meant to prevent "eyesores" that would harm property values - policies driven by people dependent on those higher home values. The 2008 financial crisis began when, for political reasons, the Fed, the federal mortgage lenders (Fannie Mae, etc.), and others were pressured to pump up housing prices.

And finally, many local governments also see your house as their greatest asset, for property tax purposes. Not to mention some HOAs. When housing becomes a central piggy bank, any freedom that cause any possible risk to housing values must be crushed. And your neighbors will cheer it happening.

De-linking housing and wealth

To start tackling this issue of avoiding the high-house price spiral, the first step is to de-link your primary residence as a primary contributor to net worth. In the traditional sense this means holding other investments, but we want to go beyond that. What I'm talking about is a change in mindset, in which my house is my greatest asset becomes housing is an expense to be minimized.

I learned this concept in grad school from another student, who was in the no-student-loans club. Most of us felt that we HAD to maintain a certain "standard of living," but this guy, and his wife, didn't give a damn. He drove a rusty VW rabbit, and lived in a trailer, but when talking about money he explained that the trailer was $15,000, he paid it off his first year of grad school, so he was living rent free. Zero rent money meant no loans for tuition, and when he graduated he had a huge down payment for a proper house, bought a new car cash, and had zero loans while the rest of us were starting from zero (yours truly) or in debt. And the reason is because he understood that housing was an expense to be minimized. At 5 years in grad school, this meant his "rent" was only $250 a month.

Truly affordable housing

If we understand that housing is an expense to be minimized, we then have the freedom to stop trying to figure out how to get more people to "keep up with the Joneses" and trying to make 2500 square foot, stick built houses depending on the city, these are $300k to $1M) "work" for everyone. Now we can think about realistic solutions.

Different housing for different situations

When a university does dormitory-style housing, we accept it. But when someone builds a private dorm for students, everyone loses their mind. but if you really think about it, not everyone is in the life situation of being a family of particular size, making a particular income to live in a particular house. Singles or newlyweds might be just fine with a tiny house. Students or young working guys may prefer a "dorm" style house with ultra-cheap rent (I once stayed in a questionably-legal house of this type for just $140 a month - it was fun) over a traditional apartment. Some cities are also coming around to the merits of tiny housing and considering it for the elderly.

Incremental Building

A very common form of home construction in traditional societies, and even in parts of the world right now, is the idea of incremental building. Someone starts off with a tiny house, and they add to it over time, as they build up savings. With conventional housing, this can still be done with landscaping or outbuildings, but in a freer society, home construction may follow radically different principles in which homes are designed to be built incrementally. Quite possibly the owner is also the one building.

Collaborative Construction

This one's a bit radical, but some development of your property could be done with the neighborhood in mind. In the case of renewable energy, for example, it might be possible to set up agreements or a neighborhood association to purchase a renewable energy system that covers several houses, or the whole neighborhood. This is extremely difficult to do in the current energy policy framework, and having spec'd out a few systems I know it isn't always feasible, but the freedom to build should be there.

After energy, all-yard gardens and fruit trees could become a viable source of food in certain communities, as well as an activity that could bring people outdoors and into contact with each other. Alternatively, tree-planting or light construction discussed between neighbors could be the start of a local culture, in which people get the most of their local environment together, by working together and speaking with each other. This culture in turn could begin to lower other "costs" like crime and dysfunction, in the same way that our ancestor's cultures had been doing for centuries before Progressivism came along and built the Indebted Society.

Taking on City Hall

All of these solutions, and more that we may discuss, still have to face one central problem: the central planners. As long as housing and any and all building projects are based around maximizing tax revenue, many options will not be available. This is why I put together the Debt Free Society discussion group, and am also kicking out ideas in the Plan for Action.

We will proceed city-by-city, flipping city governance from Progressive/SJW thinking to that of a free city, and as we do so, "but how will people live?" is going to be answered with "We've already figured it out, just get out of the way!"