MARCH 16, SUNDAY

ABUNDANCE (2)

Continuing to respond to Ezra Klein’s ABUNDANCE I became aware of a  second thing only recently.  I will find out soon what I can sell this house for.  A neighbor recently sold her house of a similar size and similar view for $500,000.  I probably won’t get that much, but I am certainly going to receive more more than the $30,000 I, personally, actually paid for my house.

But this brings me back to Ezra Klein and ABUNDANCE.  Because it is quite clear to me that no one making my income can afford my house.  If Warren Wilson College had let me go on renting tax free until I retired, if I wanted to keep on living in the Asheville area. I would be on the edge of poverty now.  I certainly couldn’t have afforded to buy a house at retirement and couldn’t now afford the rent on a house like mine.

How could a house that cost $60,000 and has been lived in for 35 years be worth about $500,000.  With depreciation I’d expect $30,000.  That is what would happen to a car.  A used car wouldn’t shoot up ten times in value, why should a house?    How can you calculate the value of a house anyway?  Until five years ago I had no idea what my house was worth and didn’t think about it.  It didn’t matter, I thought I was going to live here forever.  This figure of $500,000, which I may not  get (or may get more), came out of the blue.  It seems like a fantastic amount.

The answer is very simple according to Ezra Klein.  The answer is quite simply supply and demand.  There are more people wanting to buy a house, particularly in popular places like Asheville, than there are houses.  If you are a developer you make the most money on a luxury house so most of the houses that are being built and are for sale in the Asheville area are luxury houses and very expensive.   There are few lower income houses being built here.

It doesn’t have to be this way.  It is the regulations around housebuilding and owning that allow only single family homes on large lots to be built that cause the problem according to Klein.  Back in the 1950’s and earlier a town like Asheville had a number of boarding houses, sometimes called flophouses, where people with little income could get a cheap place to live.  There was a much greater variety of house, apartment house even in the center of town where people could live cheaply.  If there was affordable housing in Asheville there would be almost no homeless people.  If there were affordable houses in Asheville my house would be worth the $60,000 I paid for with depreciation and inflation added in.  

My house isn’t worth any set figure.  My house is only worth what people who want to live in Asheville and are competing with each other for the few houses for sale are willing to pay.  The worth of the house is simply what people. desperate to buy a house, are willing to fork out.

So this tempers my delight in selling the house for a huge price.   Something is wrong with the system that allows this to happen.  Most servers in restaurants in Asheville can’t afford to live in Asheville.  Neither can teachers or taxi drivers or plumbers or carpenters. 

Through no fault of my own I am complicit in a system that is not only unfair but is part of the reason there is such a huge income disparity in the United States and one of the reason that we have so much feeling of anger at not being able to live on stagnant incomes and why we have so much polarization.  And it is liberals like me who are the cause of this problem.  My MAGA barber wouldn’t put it this way, but he would absolutely agree.  I have been tone deaf, as have been most of my liberal friends.

This won’t keep me from getting as much as I can for my house, though it won’t be up to me, it will depend on how desperate buyers are.  But I will do it knowing that it is not something that I deserve and that something is out of kilter and that I am complicit, as a liberal, in this mess.