My housing insecurity, and why it should be yours.

Two years away from the peak of the great housing bubble, the talk has turned to whether we’ve reached a bottom. And whenever there is talk of a bottom, there is also the inevitable talk of recovery, the speculation about just how long—five years? ten?—it will take for us to get back to where we were. Even at this point, the idea that there is simply no going back-not for decades-is still very hard to stomach for Americans who have never seen or imagined a more or less permanent drop in value of housing.

It’s time, however, to start thinking about the likelihood that even when the worst of the financial crisis is over (and it will be), a permanent drop is exactly what we will still be going through.

The belief that to own your home and your land is to assure your future is near universal. It predates our times by many years—it sent the homesteaders into the hard ground and dry plains of the West. And in the second half of the 20th century, the confidence that home ownership equaled security was consistently rewarded.
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Thanks to the invaluable work of Yale economist Robert Shiller, we know that since the First (yes, that’s the first) World War, there have been two dramatic upticks in home values, one in the 1940s and a second in the last 10 years. The last sustained fall on the other hand, came close to 100 years ago. Almost a century of experience has gone into reinforcing the conviction that even if the price of your home does not rise, at least it is not likely to fall for any length of time. The sense of economic security that came from that.

When it comes to real estate, I have almost always found myself in a minority among Americans. I was very suspicious of the run-up in home prices when it started. I now find myself equally skeptical that there will be a housing recovery of the sort that people expect. Real estate has just never meant, for me, the kind of stability that it has meant for most of the country. The reason is the New York City neighborhood I grew up in.

It was called Jackson Heights, and it was a neighborhood particularly hard hit by the real estate collapse in New York that followed the stock market crash of 1987. But more unusually, its plan, architecture and history still bore the marks of the much earlier crash of the Depression years. It was never, as some urban neighborhoods are, stagnant or decaying. Through its whole history, it was vibrant (more languages are now concentrated in its one zip code than in any other in New York, and very possibly the world) and mainly middle class. Yet, nonetheless, it resonated with cautionary lessons about relying on the permanence of real estate wealth.

I know the history of Jackson Heights in some detail partly from having lived there and partly through the efforts of a talented amateur historian Daniel Karatzas, who plotted 100 years of the history of one zip code in a book rich with records and interviews published by a local historical society. The neighborhood was one of the first in the United States to be planned and built by a single developer, the Queensboro Corp., which hoped to take advantage of the eastward extension of New York’s subway system.

The Queensboro Corp., set about building a series of apartment blocks around elaborate gardens. The apartments were planned as “cooperatives”-this is similar to a condominium, except that instead of “owning” an apartment, residents own “shares” in the whole building. (It’s common in New York, rare in other parts of the country.) Built mainly in the late 1910s and the 1920s, the Queensboro corporation’s co-op apartment buildings in Jackson Heights were elaborate examples of the period’s residential architecture, built around gardens—really, small private parks.

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Source: The Big Money.com