This is Emotional Investment, Joel Anderson’s column about money and how we think about it. To suggest a subject or get in touch, email [email protected].
A year into living in the two-bedroom, two-and-a-half-bathroom townhouse we rent in the Bay Area, I saw a new batch of online real estate listings land in my inbox—and one included a home three doors down from ours that was for sale.
I couldn’t resist the temptation to sneak a peek. I could have guessed that it was going to be pricey—we live in a lovely neighborhood, next door to one of the nation’s leading research institutions, that also happens to be walkable to several grocery stores, coffee shops, and restaurants. We’re surrounded by some of the highest-rated public schools in the nation, let alone in California. And it’s a picturesque setting in which to raise a family, dotted with soaring redwoods and palm trees. From the bedrooms in our town home community, we can see the outline of the Diablo mountain range peeking out through the fog rolling off the Pacific Ocean.
But our house still felt very ordinary. It sits across the street from apartment complexes meant for grad students and visiting professors and fellows. On our block, there’s little evidence of real wealth among our neighbors, other than the Teslas that sometimes sleekly whiz through the streets.
When I opened the listing, I got a reality check. The home three doors down was going for nearly $2 million. It had roughly the same guts and foundation as ours. Yes, it was updated throughout and had a tree-canopied back patio that works great for relaxing during the increasingly uncomfortable summers that we suffer through without central air conditioning. But still—$2 million?
That got me thinking about what our town house cost, and lo and behold, I discovered we were living in a home worth more than a million dollars—despite its total absence of modern updates or finishing touches. Our walls have been painted over with dull eggshell-colored paint, oh, maybe a dozen times over the years. It still has its original sinks and plumbing—from 1978. We have the dreaded white refrigerator. The HGTV-loving 11-year-old daughter of friends who live in Alabama—in a much newer and larger house—looked up while sitting in our living room and earnestly asked, “Oh, so is this what popcorn ceilings look like?”
Still, I thought a million-dollar home would feel more glamorous than this. Now, it wasn’t totally a surprise: My wife and I have been renting in this neighborhood for more than eight years, two in our town house. It’s challenging to find affordable housing here. Most rents routinely climb over $4,000 a month—we were fortunate enough to find a slightly lower rate during the pandemic and our landlord seemed to take a liking to us. But we have always wanted more. When our son was still an infant, we’d push his stroller all around town and fantasize about being able to move into one of those elegant homes owned by Silicon Valley millionaires. It reminded me of my own youth, when my mother would drive us through Houston’s toniest neighborhoods to gawk at the mansions, the same as her parents had done for her and her siblings when driving through the white neighborhoods in Jim Crow Louisiana. I’d always dreamed of being the first person in my family to live in a house that other people dreamed of living in.
So, sure, we already have enough—a stable place to live. But we wanted to buy a house for ourselves, like so many other Americans, so many who, like us, have been priced out of the housing market.
Ours is a familiar story: We now have a toddler, almost 2 years old. We want a bigger home for all of us—a bedroom for our son, a dedicated work space (both of us work from home), more storage. We want updated appliances and finishing touches, and maybe a small yard for him to play in when we can’t get out to one of the several nice parks and playgrounds in the neighborhood. We love the Bay Area, but as idyllic as it’s been, it’s not perfect: We live a four-hour flight from my family, we’ve found many of the people here to be cold, if not outright standoffish, and it’s one of the most expensive places to live in the country. We’ve talked often about moving back to my hometown, Houston, where my family still resides and the housing is cheaper. But our lifestyle would be very different there—more driving, an extremely hostile political climate, brutal summers, etc. We’re not sure that’s worth the affordability—but we’re not sure staying here is worth the cost putting down for a home would require. For a while now, we’ve been, in a word, stuck.
We want to make some decisions soon, as our parents are getting older and need more support, and we want to live somewhere that feels like home. We also want more Black neighbors, to feel as if we’re truly part of a community that welcomes us, but with access to the same quality stores and schools that we have now. We want to raise our son in a neighborhood where the residents won’t call the police on him for doing the sorts of things little boys sometimes do. And we want a place that won’t stress our meager savings, so we can survive the inevitable surprises that come with advancing age—job loss, house repairs, illness—and still have enough for a college fund and retirement.
We’re doing well financially in the sense that we make good money right now. But we don’t have nearly enough for a down payment yet. And, of course, we’re living in one of the least affordable housing markets since the 1980s. Even if we wanted to buy a home, it would be a tremendous financial burden. That makes us like millions of other Americans who’ve been hoping for a dip in the housing prices and interest rates that have kept so many locked out of the market for so long. Just this week, the National Association of Realtors announced that home sales have fallen to their lowest level in nearly 30 years.
To better understand how our situation compares with others’, I reached out to Daryl Fairweather, Redfin’s chief economist, about what she’d recommend for prospective buyers in this market, particularly those of us who are looking for just a place to live, not an investment opportunity. As someone who specializes in behavioral economics, Fairweather thinks a lot about the role of home ownership in class status.
“As homeownership has become less affordable and less attainable, your home is, like, what used to be, say, a BMW,” Fairweather said. “It’s a status symbol of having made it, not even just as a middle-class American but as an upper-middle-class” American.
Fairweather said, these days, people should avoid the very natural—and socially cultivated—urge to pour as much of their money as they can into buying a home. Out of desperation or irrational attachment, Fairweather said, prospective house buyers will often become fixated on one home, neighborhood, or even city, at a price tag that makes little sense for their financial situation.
Recently, she even followed her own advice. After spending a few years there, she left Seattle, one of the nation’s most expensive housing markets and the city where Redfin is based. Fairweather decided to move to southeast Wisconsin, seeking a much more modest and affordable life. “Because of where I’m at in my life, with two young kids, it’s not like I was going out anyway, and I only live an hour outside of Milwaukee, and Milwaukee has a lot going for it,” she said. As a bonus, Wisconsin has universal preschool, so young parents like her can save thousands of dollars annually on child care.
She also warned me that because interest rates are expected to come down in 2024, we should expect a flood of buyers entering the market. That competition for a limited supply of homes will still ultimately make buying a house a very expensive proposition. It was, I have to admit, a deflating thing to hear. Talking with Fairweather just reaffirmed my general cynicism about the futility of the whole process.
Because I’m not sure if exchanging all the benefits of my Bay Area life is worth owning a home in a place like Wisconsin. I’ve come to love the rolling hills, the soft Pacific breezes, the feeling of living full time in a tourist destination. For years, I had been on the fence about the value of buying a home. I had seen the toll—financial and otherwise—it took on my mother to keep her home up: when a rainstorm knocked down a fence, or when the ceiling in the garage caved in because of a water leak, to say nothing of the constant maintenance that becomes more of a financial burden in retirement. Plus, I moved around a lot earlier in my professional career and never felt secure enough to set down roots somewhere.
My wife feels differently. Her thinking is that owning a home that increases in value is the only way we’ll ever create any real wealth. And she wants us to have a place to live when we retire. The issue looms over us. We often exchange articles with headlines like “Millennials Will Never Be Able to Buy Homes” and “Now Is Not a Good Time to Buy a Home.” We’ve sat through many dinners with homeowner friends who begin to look concerned when they ask about our plans (will we move? Will we buy?) and we can’t really say. A middle school friend who now lives in Oklahoma in a sprawling almost-mansion for a fraction of what we pay to live in California recently called me up with something that felt like an intervention: “I’m worried about you, brother. You don’t have to live like this.”
But the thing that my friends and family members miss about our affection for expensive coastal living is that we don’t want a mansion or a huge yard requiring thousands of dollars a year in upkeep. We enjoy the public amenities of living in a somewhat dense area, which include well-funded libraries and parks, absolutely no lawn maintenance—our HOA handles that as part of our rent—and not always having to hop into the car for a 30-minute trip to Costco. It doesn’t seem like much to ask for, but the cost of living out here is proof that it actually is. I doubt that we could ever replicate this lifestyle anywhere in Texas, let alone in much of the vast swath of America between the coasts.
There’s a reason I’m skeptical of my wife’s faith in homeownership. A couple of years ago, I thought I’d actually produced the final rebuttal in our ongoing debate, following the publication of an opinion piece in the New York Times headlined “Your Home’s Value Is Based on Racism.” The author was then–Emory University law professor Dorothy Brown, whose argument was that homeownership rarely produces the wealth for Black Americans that it does for white ones because white buyers drive the market. In short, Black families that prefer to live near Black people are likely never going to experience real gains in their property values because white people typically prefer to live in neighborhoods with very little diversity. But if you’re Black and choose to live in a white neighborhood, you might end up living in the kind of neighborhood where the residents call the police on you for jogging outside in dark clothing at night. Either way, there’s a cost.
Then, last week, I called up Brown, who now works at Georgetown and in 2021 published The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—and How We Can Fix It. She politely affirmed my concerns, particularly for Black homeowners who want to live alongside Black neighbors. Brown took me through her own experience trying to sell a home she’d bought when she lived in rural Virginia.
“I lived in a racially diverse neighborhood, maybe 60 [percent white]/40 [percent Black], and my personal experience was an example of all the literature,” she said. “I kept dropping the price and dropping the price, and I couldn’t get anyone to buy it. Eventually, I just took an offer to get it over with.” She estimates she lost about $20,000 in the sale.
That’s why I was surprised when she vigorously interrupted after I told her I didn’t expect to ever come up with enough money for a down payment because of family emergencies in the past year that had drained much of our savings.
“I will not let you say that,” she said, almost affectionately. She later sent me a link about a first-time homebuyer program for people like my family that offers down payment assistance and more generous loan terms. “Most states have these programs,” she wrote, a nod to my dilemma between California and Texas.
Brown had also adopted a strategy as a workaround to the racism: She rents a modest condo near her job but bought her dream house on affluent getaway island Martha’s Vineyard as a way to nullify the effects of racism—the market will always be strong there, and there’s an itinerant but steady community of Black visitors and part-time homeowners. She also recommended buying much less house than whatever mortgage we’d be approved for.
Just like that, the professor who’d made the argument I had deployed in debates with my wife to push off buying a house was showing me there was a viable path to homeownership wherever we might want to land. But I still wasn’t sure if I felt good about it.
Here I am, able to afford the rent of a million-dollar home in one of the most desirable places in the country, but still not sure how it might be possible to ever buy the kind of house I want, in the kind of place I desire, that would make that investment worth it. I still feel financially way behind my family and friends who’ve gradually settled into glorious McMansions in the suburbs of Texas. The considerable money we spend for the life we live has not bought us the security we expected would come with this stage. And we’re not sure what to do about it.
I don’t know if I’d feel more secure pulling into the driveway of a spacious ranch house in Sugar Land, Texas. But the prospect is tempting, which is why I recently added a few more Houston suburbs to my online real estate searches. I totally get why people eventually succumb to the pressure and throw all of their savings into a shot at what’s supposed to be the American dream.
That kind of homeownership might be a lot cheaper than the life I currently love, but I’ll never really know if it’s worth it.
