America's looming housing crisis
The avalanche of housing-related debt is coming. Can anything be done?
Purely out of curiosity the other day I decided to look at who was hiring in the ZIP codes closest to me. It's not that I am searching for a new line of work, though if something in the professional hammock testing line were to open up one would be sorely tempted. Instead I looked at 55 listings for things with names like "credit manager" and "collections specialist" before one (perhaps somewhat old-fashioned) company decided to spell things out for me: "debt collector."
Sooner or later, one suspects, this will be the only form of gainful employment available to most Americans. Instead of working somewhere and earning wages that we in turn use to buy things, we will all go around harassing one another for debts we have run up with companies that no longer actually employee anyone, much less sell us stuff or provide services. As long as we all use the money we make to run up new deficits no one will be out of a job. Full employment is on its way, I daresay.
So far this month, one third of Americans have failed to make their full monthly housing payments on time. The figures were roughly the same last month and the month before that. Similar numbers are being reported for automobile loans and credit cards. Federal student loans have not been collected in months. Around 10 percent of mortgages in this country have gone into forbearance. Similar so-called "hardship" programs are locking in millions of people to terms with which they may or may not be able to comply next week, much less six months from now.
Eventually the pain will come, probably sooner rather than later with the end of the $600 in additional weekly unemployment benefits set to expire at the end of July along with moratoriums on eviction in many cities. Defaults are going to pile up until practically the only people continuing to pay rent in this country will be the foreign tycoons sitting on former mom-and-pop storefronts in Manhattan, holding out hope for the return of the city's wealthy population and a return to in-person Lululemon sales.
Like every other aspect of the lockdown crisis, the coming avalanche of housing-related debt has been entirely predictable. With real estate prices grotesquely inflated and wages that were already stagnant either falling or non-existent, something like this was bound to happen sooner or later. Even before the unilateral suspension of civilization brought unemployment to Great Depression levels, the average American household had no savings or, on the eve of payday, liquid cash of any kind. We are not a saving people.
Why should we be? Corporations as a rule do not have rainy day funds; when they make money they spend it or pass it on to shareholders. Every aspect of our society is organized around the idea of relentless consumption; whenever people buy 0.02 percent fewer Chinese plastic toys between Thanksgiving and the New Year, economists start making prophecies of doom. In many cases companies fire people. We are supposed to buy things all the time, which is a nice arrangement if you have limitless funds at your disposal; for the rest of the American people, it means going into debt, regardless of how much you already owe towards your house, your vehicle, and the piece of toilet paper inscribed with Latin initials your high-school guidance counselor convinced you to purchase on credit for $35,000 when you were 18.
All of this is absolute lunacy. In a sane country, no one would be spending upwards of $400,000 for vinyl siding and hideous interchangeable light fixtures from Home Depot. Certainly no one would be paying the median monthly salary to live in something with roughly the square footage of one of those Etihad Airways luxury bathrooms minus the amenities because it is technically located within the boundaries of one of our major cities. Usury would be illegal, and we would all have a $500 interest-free line of credit at the Post Office, repayable at any time.
What can we do about it now, though? My heart goes out to the young people waving signs that say "CANCEL RENT." I'm sure the powers that be will get right on that, just as soon as they have finished abolishing the police and partnering with Disney and Nike to crowdsource a new digital streaming platform-cum-athleisure line that will eliminate both racism and bad weather. We don't solve problems in this country in normal times, when they are blinkeringly obvious. We should not expect to do so in the middle of a crisis.
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