A Review of Escaping the Housing Trap by Charles Marohn and Daniel Herriges
Published in The Public Discourse, May 12, 2024
Millennials like me were confused and incensed during the subprime mortgage crisis of 2008. We wanted reform. We wanted heads to roll. We got corporate welfare instead. In the ensuing decade and a half, we have listened and nodded along as politicians and news outlets rail against the greed of Wall Street grifters who packaged riskier and riskier mortgages in AAA-rated securities and then peddled them to unsuspecting investors, all the while preparing their own golden parachutes. We’ve all seen The Big Short. We all seem to agree about what happened and who’s to blame.
But this conversation never included a more fundamental issue, one every homeowner I know intuits on some level: housing cannot be both shelter and an investment. As shelter, it is far too expensive; as an investment, its price must go up. This is something Charles Marohn, the founder of the Strong Towns organization, and Daniel Herriges call the “housing trap.” In their new book, Escaping the Housing Trap, Marohn and Herriges lay out the problem and propose a way forward.
Housing as Investment
In the early part of the twentieth century, as building technology and housing quality improved, housing prices swung violently. When the federal government became involved in mortgage lending during the Great Depression, prices began to rise. Housing—or more precisely, mortgage paper—became a financial product. And Americans in the booming post–World War II economy needed something to invest in, generating ever-increasing demand for more mortgages. The need to make those investments safe was used to justify the practice of “redlining,” by which minorities were excluded from lending, and thus from building intergenerational wealth. With the help of these new financial products (along with cars, also bought with new consumer debt instruments), we embarked on what the authors call the “suburban experiment.” We built entire communities from scratch to a finished state and put them under glass using exclusionary zoning. They were only accessible by car, so we invented the strip mall, the shopping mall, the office park, and the hour-long commute.