It used to be that the American home was one of the most important status symbols in this country. Just getting into a home of your own was a big deal. It took years of saving, working on a plan that would result in a real estate closing, a very important affair with lawyers and everything. Most Americans started out with small tract homes in neighborhoods that were designed to hold their value so that when it was time to trade up, these homeowners could pass their dream down to the next generation and move up.
Moving up to a larger home became a signpost along the roadway to success. People paid attention to every aspect of the home and keeping up with the Joneses meant making sure your home was just as nice as your neighbors. The type, square footage, neighborhood, grounds, they were all part of it. The bigger and more expensive the better, until the the ultimate image of the pinnacle of homeownership achievement wasn't a house at all, just the front gates the led onto the estate. That was the American dream.
But why? Are humans just born with the need to drive fancy cars (the bigger the better), wear certain types of carbon in their jewelry and own the biggest, nicest possible home? Would the Founding Fathers have nodded their head in agreement when the Smith family put money down on an in-ground pool because the Jones family — folks who had never been known to swim — had done the same thing the month before?
Of course not. Amercican consumers are taught to think and act like this by the companies that hope to sell them things. Who cares if you can go to South Africa and pick up diamonds like you were plucking wildflowers off the racks at the garden center in the spring? If the cartel says they're the worth three months’ salary, that's what Americans save up.
And it used to be that way in our industry, too. But after a decade or so of loan originators telling American homeowners that their house wasn't just a status symbol but was rather an asset, their largest asset and the key to their financial dreams, we have successfully turned our society into one that no longer views the home as a symbol of success. Instead, we view the home as a pathway to success.
There can be no better example of real estate as just another financial asset than the strategic default. I was at the MBA's fraud conference earlier this spring. I heard the attorneys try to counsel servicers who had never in their wildest dreams throught that a consumer who could pay for the ultimate status symbol would just turn their backs on it and walk away because the mortgage gave them that option. It's like we're all living in the projects now and where we lay down our head isn't nearly as important as what we drive.
Last week, I saw something that solidified the concept in my mind that Americans are ready to accept the fact that the home isn't a status symbol at all. It was startup advertising company Adzookie that has decided to rent the fronts of people's homes for giant billboards in exchange for making their monthly mortgage payment. Ordinarily, I would give this no chance of working. A few years ago when advertising companies started offering monetary incentives to drivers who would allow their cars to be wrapped in ads, very few bought into this.
But then, the car dealers haven't started treating what they sell like just another financial transaction.
If you start seeing homes in your neighborhood becoming billboards, you'll know it's us to blame.