Affordable Housing Institute : US

As Harvard’s benchmark State of the Nation’s Housing reveals, and this anecdotal Washington Post article shows, the sustained runup in equity values has created striking contrasts between demographically similar households divided only by one element: the owns versus the own-nots:

 

Lorna Dressendorfer and Erin Call, both single women in their early thirties, work side by side as labor and delivery nurses in the busy maternity ward at Sibley Memorial Hospital in Northwest Washington.

 

Lorna Dressendorfer, left, and Erin Call are nurses in the maternity ward at Sibley Memorial Hospital.

 

They make roughly the same salary at their full-time jobs there, and both also have part-time jobs to supplement their incomes, Dressendorfer at Williams-Sonoma and Call installing IVs as a home nursing aide.

 

But there is one big difference in their financial fortunes that divides the two friends sharply: Call owns an Alexandria townhouse, bought two years ago, while Dressendorfer remains a renter.

As a result, Call is worth substantially more than her friend.

 

It’s true Dressendorfer has more savings than Call, who has spent most of her savings fixing up her townhouse, making it home. But, as Call says, “there’s no way she could’ve saved as much as I’ve made on my townhouse,” which she said has appreciated in value by approximately $150,000.

 

Dressendorfer’s worth is in paper, Call’s in cash, but as long as people believe their homes have liquefiable value, that conceptual wealth is economically buoying:

 

 

Michael Stadter, a clinical psychologist and organizational consultant in Arlington, said that in hard-charging cities such as Washington, known for its high-achieving careerists, people traditionally have been very much defined by their jobs. But suddenly, housing has become a new identity marker.

 

“Peers often socialize. One might have the other over for dinner, and he says, ‘Boy, this is a much nicer neighborhood, a much nicer house,’ ” Stadter said. “That fuels an issue of identity: ‘Am I really doing well? Am I really good enough?’ “

 

Jobs, cars, and houses: how people (especially boys) keep score in their twenties.

 

Some boys just never grow up ….

 

Some of this wealth creation has to do not with general home appreciation but with neighborhood improvement:

 

Ramon Jacobson and his wife bought a three-bedroom rowhouse in the Mount Pleasant area of the city in 2000 for $300,000.  Recently, a single-family house across the street was divided into seven condos [Must have been a big one! — Ed.], and a small basement studio there is priced at amount Jacobson paid for an entire house on the same street.

 

“When we bought, all our friends said, ‘You’re near the liquor store, the homeless shelter, the bus. It’s just too much money,’ ” Jacobson said. “I guess we gambled right.”

 

Naturally, if a neighborhood is on the rise, the winners are those who moved first:

 

In other situations co-workers who are both homeowners live with disparity of a different sort.

When Kathy Hendrickson and her husband moved to the Washington area a year ago from Connecticut, they wanted to buy. Apartment living was not their style. Hendrickson’s co-worker, Meagan Jeronimo, 26, persuaded her to check out parts of Anacostia and the Hillcrest neighborhood in Southeast Washington, one of the few relatively affordable, close-in areas left in which to buy a home. Jeronimo and her husband had bought a three-story, four-bedroom rowhouse for $135,000 in Anacostia two years ago.

 

It took some persuading to even get their real estate agent to show them homes in the area, but it seemed a logical choice. “It’s a nice area. We like little more space, which is a premium in those shoebox apartments you get,” said Hendrickson, 22, a legal secretary in the District.

 

They found a small, single-family house with a large yard, listed at $365,000. And they were willing to take risks that someone who got in earlier might not have taken, including allowing their bid to automatically increase and taking an interest-only loan.  “We waived everything, including the inspection,” Hendrickson said.

 

Yikes!

 

Their offer of $375,000, $10,000 more than asking price, beat out three other bidders. She knows they are paying more than what Jeronimo and her husband paid two years ago and far more than neighbors who bought a decade ago. “Their payments are almost nothing,” she said.

 

Come back in a few years, when the Post does its tragic-followup story of foreclosures and house-locked families versus liquid equity and mobility.

 

Twenty years ago, while working on a deal in Chicago, I was given a ride into town by my developer client’s perpetually envious lawyer.  As we rolled from Evanston toward the loop through dappled streets of solid Thirties homes, he could scarcely go a hundred yards without pointing out  another house and saying, with a rueful head-shake, “you know what that sold for three years ago?”  This continued all the way to the Gold Coast. 

 

You could have got it for a song in 1926 …

 

I can only imagine what he’d say today.

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