Inkwell: Authors and Artists
Lisa Harris (lrph) Mon 17 Mar 08 10:29
Our next guest author is Daniel McGinn. Daniel's recently released book, "House Lust: America's Obsession With our Homes" is a book that looks at the frenzy of the real estate market in the last decade. It explores how we went from thinking of homes as purely shelter to something much more. Daniel McGinn is a national correspondent at Newsweek, where he's worked since 1993. He's previously served as a reporter in New York, bureau chief in Detroit, and since 1999 he's been based in Boston. He writes about management, the economy and a variety of other topics. His freelance writing has appeared in WIRED, Inc., the Boston Globe Magazine, and other publications. He lives in the suburbs west of Boston with his wife and three children in a 35-year-old renovated Cape Cod-style home. HOUSE LUST is his first book. Philippe Habib leads our conversation. Philippe is the host of the <home.> and <cars.> conferences on The WELL. He lives in the San Francisco Bay area and has built his own house once and is currently in the process of building a vacation cabin. Philippe likes to make things that are typically purchased. In addition to houses, that list includes bread, beer, and sausage. For a living, Philippe writes software.
Philippe Habib (phabib) Tue 18 Mar 08 10:18
Hi Daniel, Living in the Bay Area I have always been in an environment where housing prices keep getting higher so reading your book forced me to remember that the whole country is not as house value driven as I am used to. Do you think that the Silicon Valley, and I suspect parts of the East Coast, have lived long term with the house as investment instead of shelter mentality that you write about? If so, do you see something in those markets that can say what this might mean for the rest of the country?
Daniel McGinn (danielmcginn) Tue 18 Mar 08 17:38
Hi Philippe. Thats a great question to start things off. I definitely think that the phenomenon I call House Lust is more prevalent in places like the Bay Area (and most of California, for that matter), Boston (where I live), New York, DC, etc, where home prices are quite high and have generally appreciated for most of our generations adulthoods. As I write in the introduction to my book, if you live in places like Cleveland or Detroit, the book may not resonate quite so well, since home prices have languished there for years. At the same time, I think there are several factors that make people in all parts of the country more aware of home values than they were a generation ago. Go back a couple of decades, and housing equity was far less liquid than it became during the boom. People didnt do cash-out refinancing or take out home equity loans the way our generation does. The fact that paper wealth became something it was pretty easy to convert into consumable wealth made people everywhere more conscious of it. Savings patterns changed, too: during the 2000s Americans have been notoriously poor savers, in part because many of us were betting on rising home values to save for us. I even think the Internet has played a part in this, since it brought a lot of transparency to home values, thanks to Zillow and its kin. In the book I try to describe some of the peculiar behaviors that emerged as Americas faith in ever-rising home prices became so palpable during the early 2000s. Going back generations, Americans have /hoped/ their homes would be decent investments, gaining value slowly over the decades in which we owned them. But living through the boom, when prices seemed to rise nearly overnight, definitely skewed the attitudes of a lot of us, and in the book I tried to capture some of the ways this manifested itself. Just as in the 1990s a lot of us became irrationally exuberant for tech stocks, in the early 2000s a lot of us became irrationally exuberant for homes. HOUSE LUST seeks to explain why. Finally, Id also point out that a lot of people tend to be pretty optimistic, glass-half-full types when it comes to values in their own neighborhoods. One of my favorite stats in the book is that as recently as last summer, one survey showed that 55 percent of Americans believed their homes were still gaining valuenearly two years after nationwide home prices had peaked. My book isnt really about economics, but theres a fair bit of economic research that suggests that people tend to overestimate how much home values are really gainingparticularly when you factor in interest expenses, maintenance expenses, etc. One of the best sources of data on home prices is the Case-Shiller index, now run by S&P, and I just checked its data. It suggests that home values in San Francisco dropped for a good stretch during the early 1990s, for about a year in 01-02, and peaked in May 2006. Despite that, I'm sure your house is still worth a lot more than you paid for it, which leads you to be optimistic about values there. But lot of the fallout were experiencing right now stems from the fact that people came to have a little too much faith in this notion that home prices would always go higher, even if the data suggests it aint necessarily so. Now, enough economics. Why dont you stoke my House Lust by telling me about the vacation home youre buildingand why its a good investment?
Philippe Habib (phabib) Tue 18 Mar 08 20:45
I wish I could say it was a good investment. We're building because one of my kids uses a wheelchair to get around and enjoys the adapted ski program at the resort near where we're building. Taking him there we learned there was no accessible place to stay and since we built once before we thought we'd build a fully accessible cabin. We built as small as practical and as plain as we could to keep expenses down and I jut got back from a weekend of working on wiring and installing the wheelchair lift I found used on Ebay. It will be a very nice cabin, but any financial upside will be from sweat equity. Which sort of brings me to a facet of house ownership that you talked about, but maybe not as much as some of the other topics. Do you think that this perceived house wealth has resulted in people doing less themselves than in the past? Growing up, my dad and all of my friend's dads did all of the fixit work. Now there are pros who handle every facet of upkeep. Am I imagining this or has the hiring of people to do work around the house become more mainstream?
Daniel McGinn (danielmcginn) Wed 19 Mar 08 13:14
Wow, Philippe, if you're doing your own wiring, I'm definitely impressed. I think you're definitely onto something about our generation being less handy than our parents'; I touch on this a bit in the book. Fact is, many of us sit in front of computers typing much of the day, so it's not a big surprise many of us are fairly useless at home repairs or improvements. Also, a lot of the stuff we put into our homes has become a lot more complicated in the last generation. (That's true in the automotive world, too: even people who know their way around an engine often struggle to fix modern cars without diagnostic computers and the like.) I'm surprised how many of my friends can't figure out how to hook up a surround-sound stereo or new television there are so many wires. I can do that, but I can't do the wiring you're doing. It sounds like you have great motivations for building your vacation home, and a cold-eyed realism about the extent to which it will be an investment. But let me counter your generational observation with another one: when I was growing up, I didn't know anyone who had a vacation home. Now many of my more affluent friends already own or are in the market for one. In HOUSE LUST I talk about some of the things that have driven increases in vacation homeownership (things like discount airlines and work-anywhere technologies are key drivers). But since you're actually building a vacation home, have you given much thought to why this seems a much more common experience nowadays than in the past? Is there something more here than the general rise in affluence?
Cynthia Dyer-Bennet (cdb) Wed 19 Mar 08 13:20
(Note: Offsite readers with comments or questions may have them added to this conversation by emailing <firstname.lastname@example.org> -- please be sure to put "House Lust" in the subject line. Thanks!)
a plague of cilantro (cjp) Wed 19 Mar 08 13:47
Hi Daniel, and thanks for coming to The Well for this discussion. I'm about 10 pages away from finishing your book and have truly enjoyed it. Your book really captures the different ways that house lust has sunken its teeth in the American psyche, and I found myself feeling rather sheepish when I ran across what seemed to be my very own doppelgangers, like the folks who dream of fancy mudrooms and spa-like bathrooms. I, for one, blame it all on Martha Stewart. We live in Silicon Valley, and our area's full-bore house lust is just barely beginning to cool off. While there's still way too many little ranchers on the market for over $1M, and way too many silly people who buy them, I've noticed that inventories are way up even in the higher-end neighborhoods in the west valley, like Saratoga, as well as in classier downtown areas like Willow Glen. My question to you is, are you writing (or planning to write) about the other side of the house lust phenomenon, i.e., the people who got subprime loans, the people who designed and marketed subprime loans, the people who have zero equity in their homes because they cashed out on credit lines or have seen their house's value plummet?
Philippe Habib (phabib) Wed 19 Mar 08 14:01
I think your book really covers a lot of what has helped to make the vacation homes possible. The escalation in prices and the easier access to that equity. Our parent's generation couldn't tap into that equity and to build that vacation home, they would have had to get a land loan from a bank, then have enough equity in the land to use it as collateral on a construction loan. Now solidly middle class people can just write themselves a check instead of qualifying for what used to be tough loans to get. A lot of banks, even now won't do construction loans to owner builders because the risk of the place never getting finished it too high. With that easy access to equity all of that dissapears. The flip side of that, much like the people who got caught in the subprime mess, are those properties for sale with a foundation in place that are offered for less than the raw land would sell for.
Lisa Harris (lrph) Wed 19 Mar 08 17:18
Dan, I too am really enjoying your book. My House Lust began years before this most recent big real estate boom. I've been a floor-plan lover for years (I should have been an architect, but the math eludes me). I have made my husband turn the car around so I could grab the information in the tube. My children are only too aware of what we call the "baby torture tours" when we would drive around prospective neighborhoods looking for houses (when we were in the market and not). We live in an urban area with smallish, older, charming (and not) homes. And although I can't wait to turn my carport into a 3rd bedroom for my daughter and laundry room for me, I still can't imagine more than 2500 sq. ft, since I'm living in a mere 1250 now. I was really fascinated by the guy in NY living in under 200 sq. ft. I assume you met no one living in smaller quarters than that.
Daniel McGinn (danielmcginn) Wed 19 Mar 08 17:47
Hello "a plague in cilantro." Thanks so much for reading HOUSE LUST. First, you needn't feel particularly sheepish if you recognize parts of yourself or your own behavior in my book. As I write in the introduction, I have a fair bit of it myself. My family is currently trying to find a way to do a mudroom on our house... and renovate the basement... and redo the downstairs bath. So long as one doesn't get carried away with these things, I'm not sure this is something to feel guilty about. Re Martha Stewart, I devote a chapter of the book to the rise of HGTV and other home-related media, so I do think you're onto something there. I think it's inevitable that after so many people have spent so many hours watching other people do makeovers and renovations on TV, watching them take imperfect houses and make them perfect, that a lot of the us are more aware of the flaws in our own homes, and willing to go to great lengths to fix them. I really do think HGTV is an under-recognized driver of the housing boom (and of HOUSE LUST), so I don't think you're far off when you blame Martha Stewart. Regarding the sub-prime crisis, my book was already put to bed when it broke out this summer. I was able to convince the publisher to let me open it back up and make some very small adjustments to the introduction and epilogue, reflecting the gravity of the crisis. But as I make clear, this is not a book about housing finance. Since the fall I have been writing very often about the sub-prime crisis in my column at Newsweek.com, and I expect someone will do a book-length post-mortem on the subprime collapse. But it won't be me. I'm more interested in the consumer side of this, and looking at why so many people borrowed so much for their homes, than I am in the evolution in home finance. I'd love to hear more about your house, how happy you are with it, and whether you're worried about it losing value as the bust deepens. Thanks for reading.. and writing.
Daniel McGinn (danielmcginn) Wed 19 Mar 08 17:57
Hi Lisa, and welcome. I, too, am fascinated by floorplans. (The NYT Magazine runs a lot of them in advertisements, and I always find them weirdly fascinating). I'm hoping there are a lot more people out there like you who discover my book. Regarding house size, I should come clean at the get-go: My name is Dan, and I live in a house that measures 2472 square feet. So I am /just/ under your 2500 threshold. I would add, though, that my square footage is far from perfect. We rarely use the living room, while the kitchen is way too small. The family room, in contrast, is too big. I've always wished that we could do to our houses what plastic surgeons increasingly are able to do to our bodies, taking some stuff (or square footage) out of places we dont want it and injecting it or moving it around to places that need it. I was particularly happy with the way the book captures this idea that talking about homes in terms of square footage is a relatively new concept, and it does capture one interesting facet of House Lust. And yes, the 170 s.f. New York apartment was the smallest I visited. It reminded me of a really small, really bad single-person college dorm room. On the flipside, I was also in a 29,000 s.f. suburban residents (along with a lot of 9,000-10,000 sf. homes). Migrating between big and small homes is a great way to get a sense of how much space we really need, and of how we can justify needing more and more. (One argument for more space that I actually find compelling: in modern society, our relatives often live far away and tend to visit for extended periods, which is why so many people feel they need a dedicated "guest room.") So, Lisa, how big will your home be when you turn the carport into living space?
Lisa Harris (lrph) Thu 20 Mar 08 04:13
A whopping 1600 sq. ft. My former business put us (my husband and me) in and near some of the largest and grandest homes in Palm Beach. There is a weird sort of sub-culture in these wealthy communities. It's the people that work there - the butlers and maids and gardeners, the pool companies, the maintenance companies. All of us make nice livings working for the very wealthy, and we get to see first hand, every day all the latest and greatest gadgets and decorating ideas. It's like being a looky loo every day. On the flip side, though, it starts to get to you that you know what is new and beautiful and good, but in a million years you could never afford to live like that. That's the down side of House Lust. The side that's bad for the soul. As for The NYT magazine section, I began reading it for the real estate listings (and the crossword puzzle) while I was still a teenager. I didn't discover the articles until well after college.
a plague of cilantro (cjp) Thu 20 Mar 08 10:59
Oh wow, the NYT magazine section... I was totally hooked on it in the early 80's when I worked a block away from the American quasi-consulate in Taipei. They had a great library and would toss out the NYT regularly, right into my sweaty (literally) palms. That was one of the beginnings of house lust for me, too, with their wonderful listings and gorgeous articles on home design. And I have to admit that I've pored over the floorplans in the NYT, sometimes printing them out and trying to figure out how people in places like Brooklyn Heights can live in four-story buildings with bathrooms on every other floor. Thanks for the great answers, Daniel! I've been more of a Martha magazine and book person than a devotee of her programs, and I've been fascinated by how her taste has permeated right down through Target and BB&B stores, as well as throughout her own K-mart products, of course. As for HGTV, I don't get to watch that much teevee, so my lustings tend to find their outlet in shelter magazines. However, I do remember the first time I became aware of HGTV: it was when it was just a tiny office in the Pacific Design Center in LA; I was ogling the bath fixtures and Thai umbrellas in the shops down there and saw the HGTV office. It was still a small operation then, and I wondered what it was all about. About ten years later we finally got cable, and there it was, a whole channel devoted to houses. Amazing. We live in a rental that serves as an office/home for my husband and me, as well as our daughter. We sold our home (we did the renovate and sell thing a couple of times until a few years ago when it looked like we should get out of Dodge) and love our rented home on the edge of town. It's 2800 sf Mediterranean and about 30 years old, but over half of it is work space for us. There's lots of windows, no cathedral ceilings, good workmanship, just about the most perfect floor plan I've ever seen in terms of flow and size, and a big yard. We just keep hoping that the landlord will sell it to us someday in the future, because we definitely couldn't buy it at present prices. Until then, we just happily fork over the rent every month. So, what will your next book be about? I'm ready to preorder...
Alan Turner (arturner) Thu 20 Mar 08 15:44
Hi, Daniel! I'm still in the process of enjoying your book. For some background; my experience with mega-homes predates the era that you cover in it, but it resonates for me: I used to work at an architectural firm that designed a lot of developments for Toll Brothers and other developers, back in the 80s, up to and just shortly after the stock market crash of 1987. What amazed me, and most of the other designers, was just how BAD the things we were designing were, and how the clients just kept coming back for more just like the last development. Mullions on the windows made of tape! All Dry-Vit, all the time! All of this cheap cost-cutting schlock was to afford a huge appearance from the outside and some spacious formal spaces that rarely if ever got used. And there's still a lot of that going on. It strikes me as just short of mad: to put your money in the grand foyer and the upgraded kitchen, and take that money from the kinds of things that make a house last more than the mortgage without some serious repair costs. But that, too probably came from the refinancing thinking, even back then.
Lisa Harris (lrph) Thu 20 Mar 08 18:04
Alan brings up a great point, which my husband and I don't understand. Where's the architecture in these homes? Why is it that huge and unusable is what is marketed over manageable and sustainable and hip? Why isn't well-made valued as much as size? My small home was built in 1958. We have the original roof. It has withstood 3 hurricanes in the past 3 years alone. The original kitchen cabinets do not stick and are in mint condition. The terrazzo floors are shinier today (thanks to diamond polishing) than they were back then. The new homes west of town are not built to last in the original for 50 years or more.
Daniel McGinn (danielmcginn) Thu 20 Mar 08 18:12
Philippe--I think you're right on when you say that the advent of home equity loans is really what fueled the vacation home frenzy. In one chapter of HOUSE LUST, I ended up buying an investment property, sight unseen over the Internet, in Idaho. (I'm in Boston.) While I used a conventional loan, not a HELOC, it was almost scary how easy it was to get financing for it. While I have a ton of sympathy for people who've become overextended and are now suffering, I do think there's probably some good in going back to a system where lenders did enough due diligence to try to ensure that people taking out mortgages could actually afford them.
Daniel McGinn (danielmcginn) Thu 20 Mar 08 18:13
Lisa--I'd love to hear a little bit more about the super-homes you saw in Palm Beach. Could you actually have imagined living in them, even if money were no object?
Daniel McGinn (danielmcginn) Thu 20 Mar 08 18:20
Cilantro--Your house sounds downright dreamy.... Re next book, I'm still recovering, to a certain extent, from writing HOUSE LUST. I wrote it in 15 months, and the housing bust was worsening the whole time I wrote it, which made it a challenge in terms of tone. I'm very happy with how it turned out, and most of the reviews have been quite positive. So I'm definitely in a catch-my-breath mode before I think about another book--but if you've got good ideas for one, I'm more than open to suggestions!
Daniel McGinn (danielmcginn) Thu 20 Mar 08 18:29
Hi Alan. You definitely bring an insightful in-the-trenches perspective to this. When I've visited with Toll Bros (I've been to their HQ twice over the years) their architects are fairly unapologetic for their designs. They're what the customers want, and who's to argue? But your comments clearly reminded me of the time I spent with Sarah Susanka while reporting the book; she definitely shares your sentiments. I live in 35-year-old Cape Cod home in Massachusetts. We did a big renovation in 2004. My wife's one non-negotiable condition was that we get windows with actual wood mullions. It added about $5K to the job but I do think she made the right call. As I write in the book, I do think a lot of the prevailing attitude stems from people's increasing focus on square footage and cost-per-square foot. People building new homes seem so focused on that number it's amazing that more corners aren't cut to get the most space for the least money. There have been tons of predictions over the years that American's love for big, badly designed houses might change. Alan, what do you think about this--will the subprime crisis and housing bust lead large numbers of people to revise their sense of what makes makes a home desirable? Or is square footage still going to take precedent over refined architecture?
Linda Castellani (castle) Thu 20 Mar 08 19:38
Give me architecture, please. And as much square footage as will fit inside of it.
Scott MacFarlane (s-macfarlane) Thu 20 Mar 08 21:14
Philippe Habib (phabib) Thu 20 Mar 08 21:51
As I read about the monster houses in the book, I wondered how much of the phenomenon is about house lust and how much is about a rampant consumer culture that values flash and glitz over substance and longer term value. My nephew's 20 something peers all want to drive BMWs and other flashy cars and wind up buying cars that barely run as long as they have good paint and big rims. Is it any wonder that the same societal traits are reflected in our housing choices?
Alan Turner (arturner) Fri 21 Mar 08 00:17
I think that the sub-prime crisis is just a blip in the trend to huge, badly designed houses compared to a larger issue. In nearly all of these developments, you have to get in your car and drive if you need a quart of milk or a pack of cigarettes. The banking crisis will shake out in the long run (I hope without too much trauma), but oil prices will continue to rise in the overall trend. And that brings up another issue, one that also amazed me: Just to get these big houses built on new land, they're cheek to jowel to each other, but there's no neighborhood. So you spend 1/4 of a million dollars on a house and your only interaction with your neighbor is the teenaged kid next door who practices his garage band on Friday night. There's a playground for your kids, but it's a mile and a half away. I'm seeing an interesting trend in Philadelphia, in some neighborhoods like Kensington. Old, mixed use neighborhoods are seeing a lot of development now. These neighborhoods came before zoning, so things like corner stores and bars and goofy things like bakeries and day-care centers are already built into the neighborhood's fabric. These neighborhoods also have the advantage of being near mass transit. Zoning laws are gradually changing to allow that kind of development; it used to be illegal to do a development with a speck of retail in it. But even in Kensington, these new townhouses are large. Lacking width, they go for high ceilings. I'm sure they have granite kitchens or whatever the current thing is on TV.
Lisa Harris (lrph) Fri 21 Mar 08 06:21
There are many houses in Palm Beach that might fit my style, but the social contract of living in that town would do me in. Without a doubt, the architecture is real, the workmanship is flawless, the up-to-date technologies abound. It's the people and lifestyle that I couldn't stomach. What is possible in Palm Beach is possible mostly because the homes are cared for by professional service people. So you can have a silver box collection on display and never worry about polishing the silver, or dusting underneath the boxes, because someone is there to do that for you. You can have 6 bathrooms, because someone else cleans them. You can have a specialty turf that doesn't really grow well in a windy, salty environment (but it looks great) because someone else will keep it looking perfect.
Scott MacFarlane (s-macfarlane) Fri 21 Mar 08 08:49
Scott MacFarlane (s-macfarlane) Fri 21 Mar 08 10:52
One thing we forget about the recent "subprime" collapse is how much of an artificial stimulant it was for the American economy. The last seven years have been unprecedented for how easy it was for people to share the dream (the lust) for homeownership. This (along with another artificial economic stimulant for the military-industrial complex when we entered a dubious war in Iraq) sustained an American economy that was cooling off after the dot.com/information age explosion of wealth in the 1990's. It should have come as no surprise that people with poor credit and none of their own investment in their own home would foreclose in record numbers. Other than creditworthiness, what was the real pain of bolting when they got into their house with a 100% loan, rolled the closing costs on top of the price of the home, agreed to an interest-only A.R.M. that kept the monthly nut down? Of course they are bolting (foreclosing) in record numbers when those locked rates adjust upwards and they simply can't afford their monthly payments. And, it's not as though these homeowners are walking away from equity. So, while the easy-money boom lasted, the economy chugged along on the backs of all those developer-related dollars (builders/land speculators/lumber/ plumbing suppliers/electrical suppliers/mills/lenders/realtors, etc). This went hand-in-hand with the Halliburtons/Grummans/Boeings reaping obscene profits from an obscene war. People do "lust" for a share of the American Dream of homeownership, and will typically "invest" in the most home that the market will allow them to acquire. I see this firsthand having been a Realtor for the last 11 years. The question of the hour should be whether America has yet to feel the full consequences of what we can view as George W. Bush's "war lusts" and fiscal "adultery"? How much will we continue to pay in the future for his administration's economic "sins"?
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