Our Coming Rentcropper Society

We are in the midst of a sea change in terms of the relationship of ordinary Americans to the housing market. Policymakers are not only in denial as to its magnitude, but are actively enabling courses of action that are likely to prove destructive.

One of the accidental and fortunate discoveries of the 1930s was that a long-dated mortgage, meaning 15 to 30 years, was a good fit with working conditions of that era. The Home Owners Loan Corporation refinanced borrowers who were delinquent and in danger of losing their homes from short maturity mortgages to 20 to 25 year ones, considerably lowering borrower payments. This was considered a radical experiment at the time, and was expected to lose $1 billion, a very large sum in those days. When its operations ceased, it had shown a profit. One of the big reasons was the stability of employment. Job tenures were much longer than now; in fact, being fired was rare, and usually a result of business failure or distress, not management whim or need to meet quarterly earnings targets. And with the exception of some very large corporations that liked transferring managers (IBM stood for “I’ve been moved”), families were more likely to remain in the same house over the husband’s working life.