Daniel Pennell: Thoughts on American Homeownership

Yves here. Despite the prevalence of retail therapy in America, consumption does go in and out of fashion. For instance, in the wake of the nasty 1991-1992 recession, “cocooning” was in briefly, which was code for “stay at home, feel sort of miserable and read books, but pretend you are virtuous by lighting nice scented candles and making at least some of that reading New Agey.” Entertaining at home was in. If you were feeling a tad more secure, you might decorate, but nothing really splashy, just comfortable/functional.

This downturn is leading to more fundamental rethinking of what used to be a mainstay of personal security but increasingly became a consumption item, namely, owning a home. The percentage of Americans who think of homeownership as a good investment has fallen by about 20 points in the last three years, from four fifths to three fifths. But the framing of the question is revealing. In the not-too-distant past, owning a home was seen as superior to renting, because for 20 to 30 years of paying more or less the same amount of money, you’d own the home free and clear. So even though that is technically an investment perspective, the goal was not to earn a return, but to repurpose an expenditure that had to be made regardless into a deferred payment plan.

Daniel Pennell not only puts himself in the camp of housing skeptics, but also highlights the link between the scale of homes and obligatory consumption levels. And I’ve certainly observed the converse. One of the reasons for Japan’s high savings rate is, no joke, their teeny homes. I once visited what was considered an extremely luxurious apartment by the standards of Tokyo in the late 1980s. It was an at best 900 square foot three bedroom apartment with a not all that large living/dining room, a galley kitchen, a single bathroom, and the bedrooms size by side in the back. Its price then was $5 million. With that little living space, “consumption” consists mainly of going out, travel, and electronic gadgets.

So is this change in attitude simply a sign of the times, to be abandoned if we ever get past the post crisis hangover? A delayed response to shortened job tenures, which makes homeownership an obstacle to relocating? Or are Americans coming to grip with the fact that they might not enjoy ever rising standards of living?

By Daniel Pennell, a systems expert who has testified before the Virginia House of Representatives on MERS

You know…the longer I own a home the less likely I would be to do it again.

It would be so much nicer to be able to live smaller and be more mobile.

Increasingly I find that a house is a place for your stuff. Not that I am against “Stuff”…capitalism would collapse if people did not buy wasteful stuff. For that matter Chinese Communism would fail too. The difference of course is that you need to be the one selling the stuff and not buying it.

Anyway, one of two things happpens.

Either you buy a bunch of stuff that you think you need and then buy a house large enough to fit the stuff. Then you buy more stuff and need a bigger house.


You buy a big house that your current stuff will not fill so you buy more stuff so that it does not feel like a concert hall. This is probably furniture and nick nack kinda stuff that fulfills no purpose or life enhancing utility (unlike a Harley Davidson) but COSTS A BUNDLE.

THEN of course ALL STUFF and the houses it needs require CARE. It needs to be cleaned and maintained. SO now you gotta buy more stuff to take care of the stuff and the house the stuff needs. Think….Lowes and Home Depot or even Joe the Plumber.

NOW the stuff and the house for the stuff requires the TIME to take care of the stuff (time not spent riding the Harley Davidson) with the stuff you bought to take care of the stuff. Then, when you catch up you can spend more free time at the mall buying….more stuff. Since you cannot carry much stuff on a motorcycle…you probably took the minivan, the SUV or the BMW and NOT the Harley Davidson.

NOT to mention that you need to work to pay for the stuff and the house the stuff needs. While you are working you are not enjoying either the stuff or the house for the stuff or the Harley Davidson.

Now..when you are old enough that the house for the stuff is paid for, the stuff is old too, and you are likely too old to ride the Harley Davidson except on sunny Sundays with no traffic or young children around.

SO…in short. Buy a Harley Davidson and then buy nothing more than will fit in the saddle bags. Really…do you need more than that?

Originally published at naked capitalism and reproduced here with permission.