"Houses are expensive. How can the average person expect to own one without a mortgage?"
Go back a hundred years and few people had mortgages. Now, something like 97% of houses have mortgages. When my grandparents bought their first house in the 1950's, they were ashamed and terrified of the fact that they had to take out a 10 year mortgage to do it. But unlike the "standard" 30 year mortgages of today, they were paying more principal than interest every month within a year and a half of their 10 year mortgage (the 30-year mortgage doesn't hit this point until about 20 years in - but before then, the vast majority of homeowners have sold their houses and gotten a *new* 30 year mortgage on a different house - and will go on for another 20 years with monthly payments that are mostly 'interest', or profit for the bank).
Once upon a time, when wages were high and land was cheap, people didn't need a mortgage to buy a house. They'd save up for a few years, and then buy their house for cash. Or maybe they'd borrow some money from friends and relatives. Now, however, that's impossible; what few private (non-bank) capital accumulations there are are tied up in 401K plans and can no longer be used for the private loans which used to be common. Now we must all turn to the banker and accept his terms - no matter what they are - to buy anything "expensive".
So why are homes expensive, anyway? 20 years ago, college educations used to be attainable without loans by working while one went to school. This is what my father did in the 70s, and (mostly) what I did in the 90s. But as college tuition and 'fees' have been growing at double-digit rates over the last decade and change, that has become as much a pipe dream as the mortgageless home purchase. What happened? The scarcity of PhD. laborers certainly hasn't increased. But what has increased is the availability of student loans guaranteed by the government. What we have seen here is what happens whenever you have too much money sloshing around in an economic system - prices rise in order to soak up the surplus of capital. Universities know they can charge more every year, since there's more government-backed student loan money out there. So they do. The end result is you have janitors in the Cal State system making six figures and a multitude of offices being erected to enrich the friends and relatives of the high-level education bureaucrats while the poor students find themselves going $100k into debt peonage (that is no longer dischargeable in bankruptcy court) for an education that costed $20k just a few short years ago.
The same thing has been happening in housing, albeit at a much slower pace (but over a longer period of time). As the government floats trillions in no-interest funds to the banks and guarantees the mortgages the money is lended for, the banks are willing to loan more and more money. But this doesn't build houses (at least, not immediately); it simply makes them more expensive, as all that money loaned out by the banks drives prices up and crowds out anyone who would think of paying cash.
And who profits from these mortgages? I invite you to do some digging on a few facts (I promise it won't be hard) and make some simple calculations on them, to wit: 1) how long people hold onto houses before selling them, 2) how much principal is paid on that mortgage during that time, and 3) how much interest is paid to the bank during that time. It won't be hard to see who really profits from "home ownership" that is paid for with a decades-long mortgage. It should be no surprise when we see that no one can afford to retire any more unless they've been a high-income earner all their life; most are simply not being able to accumulate capital, as their paychecks (their *after tax* paychecks, a topic for a whole other thread) are being sucked up by mostly-interest loan payments on not just houses, but also cars, student loans, and medical loans. Throw 'declining wages' into the mix (and rising rents for those who can't scrape together enough for a down payment), and yes, I think the term "serf" or "debt peon" is not at all outrageous.
Owning the home you live in (without having to enter into a 30-year debt peonage contract) shouldn't be considered an opulent luxury, realized by only a small fraction of the public. It should be something *most* peole should reasonably expect to experience. If this belief makes me crazy (or worse, a communist), then PLEASE straightjacket me and throw me in a padded cell now so I might be spared having to witness what is going on in this country.
Yankee Gays waste good vodka ..... how queer is that?
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