Tag Archives: American Dream

Big companies buying up hundreds of Chicago area homes

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In a sign of the post-Great Recession real estate market, big firms are buying up Chicago area real estate:

The Chicago market is vast enough that even an invasion of this size won’t change home prices overnight. But the frenzied activity is a clear sign that professional investors believe two important trends are ripe for opportunity: housing values are recovering, and many Americans have given up on the dream of homeownership and will become renters…

Three years ago in an opinion piece for the Tribune, Matthew Desmond, then a sociology department fellow at the University of Wisconsin, voiced worries about what he predicted would be a concentration of housing stock among a few owners, causing big landlords to get bigger and smaller landlords to fall by the wayside. He called it the “Wal-Martization of urban housing.”

On one hand, this represents a change in the Chicago market as firms look to buy homes, rent them, and possibly make more money down the road when prices rise again. On the other hand, the percent of units these bigger firms are buying is not huge yet.

Desmond’s comments are interesting. Why shouldn’t real estate and housing operate in a market space where corporations can get involved? We have few problems with this in retail so what is the problem in housing? Desmond and others might argue that housing is a more basic need – though American residents do not have an explicit right to it. Also, there is a long-standing ideology in the United States that residents should have choices among places to live and homeownership, determining the fate of one’s own property, is the end goal rather than having to be subservient to a corporate landlord.

Describing the 20% of temporary rich (“mass affluent”) Americans

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New survey data looks at new rich Americans who draw a lot of attention from companies and who might have outsized political influence:

Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America’s economy and politics. This little-known group may pose the biggest barrier to reducing the nation’s income inequality…

Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2 percent of earners…

Companies increasingly are marketing to this rising demographic, fueling a surge of “mass luxury” products and services from premium Starbucks coffee and organic groceries to concierge medicine and VIP lanes at airports. Political parties are taking a renewed look at the up-for-grabs group, once solidly Republican…

In a country where poverty is at a record high, today’s new rich are notable for their sense of economic fragility. They’ve reached the top 2 percent, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged…

As the fastest-growing group based on take-home pay, the new rich tend to enjoy better schools, employment and gated communities, making it easier to pass on their privilege to their children…

Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40 percent of total U.S. consumer spending.

This sounds like a group that would call themselves upper middle-class: wealthy enough to enjoy some luxuries and good things for their kids but not wealthy enough to truly compete with the millionaires and CEOs. They resent the idea that they are rich as they think middle-class values, such as hard work and providing for their kids, helped them arrive at their current position.

Yet, when the median household income in the United States is around $50,000 it is hard not see this group as wealthy. To some degree, it is all relative: the mass affluent might not be able to consistently live the high life in Manhattan or San Francisco but they could do really well in cheaper places like the Midwest or Atlanta or Dallas. Perhaps it is the perceived fragility that matters most: losing their job might be enough to move them down back near the median income, though unemployment rates are much lower for the educated and well-trained.

A few questions after reading this article:

1. How big should this group be in the United States?

2. Long-term, which party will capture these voters?

3. Will this group get a lot of negative attention as they are more accessible than the ultra-wealthy who can live more cloistered lives?

Sociological musings about American culture in “It’s A Wonderful Life”

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This talk by a sociologist about It’s A Wonderful Life serves as a reminder that the film provides a nice window into modern American life. Although it is a holiday movie, here are a few sociological ideas that still resonate today:

1. Mr. Potter is the evil banker and the primary villain. While hero George Bailey just wants to help his family and others in the community, the banker only cares about money. Could be connected to discussions of inequality, the wealth of bankers, and the role of the finance industry in helping to build communities.

2. Hero George Bailey wants to build suburban-like homes in a new subdivision in his community. The movie came out at the beginning of the post-World War II suburban boom and anticipates that many Americans simply want a home of their own.

3. The movie is set in a relatively small town where George Bailey and his family can know lots of people. Even as Americans look to private single-family homes, there is still often a small-town ideal where everyone gets along and helps each other (and often the assumption that we have lost this over time).

4. George Bailey seeks meaning in his work and life. When he doesn’t find it, he considers suicide. Bailey wants to provide for his family and friends and struggles when he cannot do this.

5. George’s life is saved by an angel. Americans tend to like angels even as more Americans say they are not religious. Angels fit with a spirituality where God generally wants people to succeed.

6. The celebratory ending of the film comes as George is surrounded by his family and friends. The emphasis on family life is not unusual in American stories but this also highlights the small town coming together. Bailey has the American Dream at the end: a home, a loving family, helpful friends, and is optimistic about his future.

Of course, this film has been analyzed plenty as a classic sitting at #20 on the AFI’s top 100 movies. Yet, it is an important moment as America started seeing itself as the prosperous superpower.

Don’t blame Black Friday and Thanksgiving shopping; they just expose the consumerist system

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As crowds gathered to shop on Thanksgiving and into Black Friday, there has been plenty of backlash from those who think this violates a sacred family holiday to those who don’t like that relatively low-paid retail workers have to work another day to those who bemoan the lengths Americans will go to fight over some doorbusters. All of this might be true but I think it misses the point: these two days simply lay bare American consumerism. In a similar way that Walmart and McDonald’s tend to take the brunt of complaints about big box stores and fast food restaurants, Black Friday and shopping on Thanksgiving share a similar fate: they simply make real what is true about Americans and what they want.

There is a whole system at work here. It involves buying single-family homes, talk about the American Dream (equated with acquiring certain items), dreams about scientific progress and mechanical abilities such that life will be easier, liking having choices more than enjoying the goods themselves, acquiring stuff, and an economy and financial system dependent on average citizens continuing to buy beyond subsistence items. This system involves some great advances put to interesting uses, things like the assembly line, the internal combustion engine, transistors and semiconductors, the mass production of houses, the rise of marketing, and mass media.

The lesson is that hardly any day all year long is sacrosanct any longer; more than family togetherness, more than patriotism, perhaps more than the Super Bowl (which combines all of these things in a different way), Americans enjoy shopping, good deals, and consumption. It is competitive and alluring and our collective retirement accounts may all very well depend on this behavior.

New film “Tiny: A Story About Living Small” raises two questions

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Hear from a couple who put together a film titled “Tiny: A Story About Living Film” that aired this past weekend:

Smith: The Tiny House is about 124 sq ft. It has a living space with an 11-foot ceiling. There is a small galley kitchen, a small bathroom with a composting toilet and camping-style gravity fed shower and a sleeping loft. The main living space has an 11-foot ceiling, which helps the space to feel bigger than it actually is, with a small closet and two built-in bookshelves. There is also a built in desk and dining table that Merete made from scraps left over from our reclaimed hardwood flooring…

The whole concept of living tiny seems to fly in the face of the traditional American Dream of a big house with a big yard — how do you guys define the American Dream?

Mueller: One thing that we’ve learned from making our film about the Tiny House movement is that the American Dream is changing. The recent housing crisis and recession have made it harder for many people to attain the financial stability required for a big house in the suburbs and a car in the driveway, that old model of the American Dream. On top of that, we’ve found that many people in our generation are beginning to question and re-evaluate that old American Dream and are opting instead for lifestyles that are more flexible and less tied-down to one particular place. As a society, we’re in a place of transition. I think that many people — whether by necessity or by choice — are learning that quality of life isn’t necessarily tied to how big our houses are or how much stuff we own, but about the experiences we have and the quality of our relationships.

I think there is some truth to the last paragraph above – but I think it still raises some interesting questions:

1. Just how many people are willing to live in tiny houses versus smaller houses? It is one thing to downsize from 3,000 square feet to 1,500 feet. It is another to go to a couple of hundred square feet. At the end of the interview, they admit only one of the couple now lives in the tiny house. Tiny houses are stark contrasts to McMansions but how many people would actually live in them long-term?

2. More people today might be more transient, which could be good for people rethinking of the size of homes they need how much stuff they can accumulate. (There still could be an uptick in digital consumption and ownership – but it all fits in your laptop or smartphone moving forward). But, this isn’t necessarily good for forming quality relationships. If everyone is moving around more frequently to take advantage of cultural opportunities and jobs plus people are connecting more online, strong ties are hard to form and civic life suffers.

If homeownership in the US isn’t about making a good investment, what is it really about?

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Politicians and others argue homeownership is a good financial investment. But, if it isn’t really a good investment, what is homeownership in the United States all about?

Politicians and pundits across the spectrum regard homeownership both as the best investment a family can make and a measure of national prosperity. But a significant majority of Americans believe differently. According to a 2012 Pew survey, 86 percent of Americans now believe the key to a middle-class life is a “secure job,” almost double the share (45 percent) who say the same about owning their home. To compare, seven out of ten respondents to a Time/CNN/Yankelovich survey back in 1991 said that homeownership was essential to middle class membership, while just one-third said that a white-collar job was required. Since 2004, the overall rate of homeownership in the U.S. has declined from 69.2 percent to 65 percent…

Of course, I’m by no means advocating that we put an end to homeownership altogether and become a nation of renters. My hunch is a homeownership rate of between 50 and 60 percent is just about right; and that’s not too far from where the U.S. is now. But we can’t hide from the fact that excessive levels of homeownership — either among nations or metros — seem to be associated with lower levels of innovation, productivity and economic development.

I wholeheartedly concur with Columbia University economist Edmund Phelps (I quoted him in my book The Great Reset) when he says, “it used to be the business of America was business. Now the business of America is homeownership.”  And, he adds, “America needs to get over its ‘house passion.'”

Americans like financial investments but they also like other aspects of homeownership. Here are a few other reasons:

1. Some have argued Americans like private spaces to the detriment of public spaces. Having a home that you control, and not just rent, is the epitome of this private space. Owning a home is viewed as related to independence and self-determination.

2. Americans like to consume and houses are another consumption object. When you own, you can put your own personal stamp on the property as well as shape the house into a reflection of yourself. (This is opposed to viewing homes primarily as dwelling places, not as individual expressions.)

3. Owning a home is historically linked to the American Dream. Being able to buy your own home demonstrates that you have made it. The American Dream may indeed change in the future but it takes time to overcome this decades-old inertia.

4. This may not come up much now but homeownership was viewed in the past as a bulwark against communism.

5. Building homes as well as buying and selling them is a big industry. There is a lot of money to be made – though homeowners themselves might not make much.

6. There are long-standing negative perceptions about renters including renters are often from less desirable segments of society and renters are less committed to a community because they are more transient and don’t have the same kind of investment in their property.

While the idea of investing in a home may soon fade, there are other influential reasons Americans choose to buy homes. Economics may be a powerful motivator but it isn’t the only one when it comes to homes.

Don’t think that buying a McMansion will make you happy

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A new book titled Happy Money: The Science of Smarter Spending suggests buying a nice home does not lead to greater happiness:

What could possibly be more satisfying than ditching that old starter home you and your spouse moved into during your broke newlywed years?

Two studies cited in “Happy Money” prove otherwise.

When researchers followed groups of German homeowners five years after they moved into new homes, they all wound up saying they were happier with their newer house. But there was one problem: They weren’t any happier with their lives. The same was true in a study of Ohio homeowners in which it turned out they weren’t any happier with their lives than renters.

“Even in the heart of middle America, housing seems to play a surprisingly small role in the successful pursuit of happiness,” Dunn and Norton write. “If the largest material purchase most of us will ever make provides no detectable benefit for our overall happiness, then it may be time to rethink our fundamental assumptions about how we use money.”

Regardless of whether someone owns a McMansion or not, this goes against a lot of the American Dream. Critics argue McMansions aren’t great purchases because of their poor design, environmental impact, poor community life, and other issues, yet people have continued to buy larger houses in recent decades. At the same time, some of these critics would tell McMansion owners to buy homes that better fit their individual needs. What unites these approaches to homes is the idea that people are better off having purchased a home. Perhaps they are in the eyes of society – indeed, people once argued homeownership would keep people from taking an interest in communism. But, if this research holds up, then perhaps we should retire the argument that individuals will be more satisfied as homeowners and stick to making a civic or community-oriented pitch for homeownership.

Wait, the good episodes of Arrested Development are like fully furnished McMansions?

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One commentator suggests fans of the new season of Arrested Development should be patient and then makes an interesting comparison:

Stay cool, Internet. Arrested Development‘s new Netflix-delivered season may prove to be great yet.

Within hours of the streaming service dropping a 15-episode Bluth bomb, critics and fans rushed to proclaim the new episodes as substandard. Mere model homes instead of the fully furnished McMansions that they had watched and rewatched over the past few years. And while I certainly count myself amongst the fans who feel at least a wee bit disappointed by the new episodes, it’s still far too early to jump to conclusions about the episodes’ quality or legacy.

You see, Arrested Development is a unique show. While most sitcoms rely on simple setups and punchlines for their laughs, this is one show that runs amuck on the formula.Punchline often come before setups, and it’s not uncommon for objects to regularly flash across the screen and get call-backs several episodes (or even seasons) later. Basically: Many of the show’s jokes were simply not designed to make any sense the first time you see them.

As someone who has studied the use of the word McMansion, it is unusual to see someone making a favorable reference to McMansions. In this article, fans of Arrested Development are waiting for the “fully furnished McMansions” which are compared to the good episodes of the show. This is odd enough in itself. But, there is an extra twist. The show itself has commentary about McMansions. As Wikipedia puts it, “The Bluth family of the television series Arrested Development is in the business of building opulent-looking sub-quality housing.” Part of the show’s comedy is that this family who involved in a quintessential American industry, building homes, is so dysfunctional. They provide the American Dream but live a wacky version of American family life.

I also suspect that many fans of Arrested Development would not be fans of McMansions. The sort of arcane and long-form humor (see the running jokes here) of the show doesn’t exactly endear itself to the masses.

Why the interiors of model homes look better

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Here are some tips to help your home look more like a model home:

Professional home stager and model home designer Katie Schafer of Chicago-based Dressed to Sell has a one-word explanation for why many new homes bear little resemblance to picture-perfect models: clutter…

Another common mistake, designers say, is assuming the furniture from your old place will fit effortlessly into your new scheme. Moving is a great time to get rid of pieces you no longer need while identifying new ones to enhance your space, said Mary Cook, president of Chicago-based Mary Cook Associates…

Cook’s upcoming book, “The Art of Space,” scheduled for publication in 2013, elaborates on those seven elements in detail. A biggie, she said, and one that most homeowners tend to overlook, is scale, the size of something, and proportion, its relationship to the things around it. Rooms that are too full — or too empty — just look wrong, she said…

Color is another element that well-decorated models employ wisely. While new homes are often delivered with white walls, a Mary Cook-designed model can have as many as 25 different paint colors. Thoughtful-yet-fearless use of color can add richness that makes a home feel warm and inviting.

In addition to color, model home designers are experts at mixing patterns and texture, said Helen Velas, president of Naperville-based Eleni Interiors. While the average homeowner isn’t likely to be as skilled, home-goods retailers have become good at bundling pieces together to help people get that custom-designed look, she said.

Staging can go a long way to helping make a sale. However, I’ve always been struck by the unreal image model homes present. The lived reality of an average American home includes clutter, probably some non-perfect furniture, and maybe some clashing colors and patterns. It involves residents and family members moving around, appropriating spaces for their own use, and being comfortable. We know this from our experiences so why would we fall for the “staged” home?

I wonder how much of this has to do with presenting an aspirational image. Think of the average cluttered home: how many residents would be willing to show that off to strangers without cleaning up(though after going through a number of for-sale homes a few years ago, there was a higher percentage of people doing this than I would have imagined)? Or think of the common image of a home: in advertisements, new homes, movies, art, magazines, etc., homes look put together. That is what we think it is supposed to look like. I remember reading about a company that had started including people in their staged homes; this added a special touch in helping people imagine themselves in the home. And this all ties into the larger American Dream image of the “perfect home.”

A new off-Broadway play criticizes making the American Dream about buying mini-McMansions

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It has become common in recent years to link the economic crisis to the purchases of McMansions. Here are a few lines from the new off-Broadway play “Heresy” illustrate this:

Chris’ college roommate, Pedro (Danny Rivera), and tarty call girl lady friend Lena (Ariel Woodiwiss) appear as witnesses for the persecuted campus radical. With the help of Pontius’ blowsy socialite wife, Phyllis (Kathy Najimy), the negotiation for Chris’ freedom devolves into a boozy cocktail party and a well-meaning but exasperating political debate. The characters spout off arguments like, ”The American Dream has been reduced to mean a mini-McMansion bought with an unaffordable mortgage,” and ”The American dream has dwindled into a vulgar, materialistic view of life.” And so on.

A lot of commentators have argued that the American Dream has become equated with consumerism. I remarked recently to one of my classes that this seems to be an odd interpretation of the “life, liberty, and pursuit of happiness” suggested in the Declaration of Independence.

But, there is little doubt that owning property was an important consideration for the American colonists and that owning a home today is one key marker of “making it” in America. I suspect the real issue here could be two things:

1. Buying and consuming more than one needs. It is one thing to be self-sufficient or comfortable and another to be excessive.

2. There are issues when individuals care more about acquiring and protecting their own possessions as opposed to caring about and contributing to the larger community. This has been a tension throughout American history.

Another note of interest: what exactly is a mini-McMansion and how does it differ from a McMansion? McMansions are usually thought to be quite large, probably somewhere between 3-10,000 square feet. Thus, a mini-McMansion would be smaller but the average new home in the United States is around 2,500 square feet so is this typical new home automatically a mini-McMansion?