Almost exactly a century ago, a fellow in Europe with aspirations of world domination asserted that “the great masses of the people…will more easily fall victim to a big lie than to a small one.” As he and his propagandists refined his idea, the message evolved to become, “If you tell a big enough lie, and repeat it often enough, it will be accepted as true.”
Truth, as we are reminded almost daily, is a moving target whose validity must be carefully questioned, depending on the source. Often, the “truth” we are asked to accept is shaped around the desired outcomes of the person or group of people whose declarations we are hearing.
A noted American investment guru warned against asking the barber if you need a haircut because since the barber makes his living cutting hair, he has a “vested interest” in the answer, making objectivity the first casualty of any such discussion.
Recently, affordability has become a popular subject of much political contention. We are certainly presented with a wide variety of definitions, explanations, accusations and denials surrounding the authentic meaning behind it. These arguments may be topical, but the most blatant hijacking of the term has been right in front of us for decades.
Some of the loudest voices of the housing industry in America, specifically the National Association of Home Builders (NAHB) and the sectors that are its core constituency, have been allowed to claim the rights to use the word “affordability” to advance its own purposes.
By continually beating an affordability drum of its own invention, NAHB has essentially been awarded the keys to the kingdom by virtually all of the other stakeholders who have necessary roles in the housing of the nation’s people. And, by endlessly repeating its message, NAHB has methodically worn down any resistance to its mantra.
Unfortunately, we can all assume part of the blame because we have simply been too lazy to challenge any misrepresentations in any meaningful way. As a result, NAHB has framed the narrative so that the mortgage sector, the appraisal and insurance industries, those responsible for the code development process, those in the public policy arena, and yes, even the aspiring homeowner, have ceded ownership of the term.
By NAHB’s definition, this has reduced the entire concept of owning a home, indeed the American Dream itself, to a single transactional event. NAHB would have us believe that the moment of purchase is all that it should be held accountable for.
Fundamental to this deception is the universally accepted notion that value can be measured by that most simplistic formula known as “dollars per square foot,” prioritizing quantity over quality, in conjunction with the outrageous contention that first cost is interchangeable with full cost, which as anyone who has ever owned a home knows to be ridiculous.
When the closing documents have been signed and the shiny new keys have been handed over to the home buyer, the process has reached an important milestone, to be sure, but the challenges facing that owner are just beginning. There is no transfer of responsibility for escalating energy costs and property taxes, insurance premiums, maintenance, replacement, or upkeep. Durability, resilience, resistance to the ravages of natural and man-made disasters, and the stability of the economy in general, remain potential problems for the homeowner.
Meanwhile, it is business as usual for those in the housing sector who essentially seek to perpetuate a model that no longer provides dependable asset appreciation or the promise of generational wealth. This was once the very foundation of the housing industry and the backbone of the nation’s prosperity and security. Those lofty goals have fallen victim to the commoditization of home ownership to satisfy the ever-escalating pressures of the dreaded quarterly report.
The accepted goal seems to be to attempt to warehouse as many families as possible, often in houses that offer little more than planned obsolescence by disguising profitability as affordability, while delivering no more than the absolute minimum that is required to pass as legal. It is akin to serving low-quality fast food by convincing people that paying cheap prices for calories is the same thing as investing in nutrition.
The situation will not change on its own. The industry will continue to serve its vested interests by repeating its big lie to anyone who will listen. The familiar voices will deliver the same refrain, sweetened with phony “mom and apple pie” rhetoric. Our industry can do better. Aspiring homebuyers deserve better.
For too long, we have stood by while this manipulation has occurred, and in that way we are complicit. It is up to us to demand the real meaning of affordability. Let’s work toward establishing a valuation metric and a home ownership model that serves everyone, especially those on the outside looking in.