by Krissy Clark
"Okay, let's talk about why you're here," said the woman in the red suit, standing at the head of a linoleum-tiled conference room crammed with people. "The purpose of this class is, number one, to assist any potential homeowner in making informed decisions."
But I wasn't here as a potential homeowner; I was here for research. In the course of my reporting for this documentary, I learned that the massive number of foreclosures in Las Vegas means there are cheap houses all over the city now, attracting a new batch of investors and first-time buyers. I wondered who these people were, and how it feels to venture into the world of homeownership while the headlines are still smeared with stories of people who stepped into that world and were spit back out. I also wondered if the new homebuyers might be unwittingly fueling another real estate bubble.
But I admit I was also here for another reason. After spending so much time with folks who had lost their homes, or were in danger of it, I needed a boost. I wanted to be reminded that homeownership isn't all woe and heartbreak. It can also be an exciting and positive experience, can't it? I wanted to be reminded of the dreams and optimism that fuel buying a house.
So, I came to this class, called "A Home of My Own?" (I read the question mark as a sign of the uncertain times), put on by the non-profit Consumer Credit Counseling Services of Southern Nevada. The teacher, Jody Mobley, holds these daylong classes for first time homebuyers a few times a month, and lately they have been packed. Some banks now require prospective buyers to attend a class like this before they qualify for a home loan. Other people come on their own accord. "It's a terrible time to be a homeowner," Mobley levels with her students. "But it's a wonderful time to be a first time homebuyer. There are some wonderful real estate deals waiting for you."
Mobley has adjusted the curriculum to include more reminders that homeownership has its disadvantages, especially in this desert valley that encompasses Las Vegas. She always asks her class a question near the beginning of the day: "How many of you know someone facing foreclosure on their home?"
"The whole valley!" says one student. Nearly every one of the 80 or so people in the class raises a hand. One guy raises two. "We all know somebody, or somebody that knows somebody, right?" Mobley says. She pauses for effect, then goes on. "You guys, you're going to know better. You're not going to make the same mistakes that the people that are at risk right now made."
Even though Mobley tries not to put too rosy a tint on buying a home, the excitement in the room is palpable. I'm feeling it myself. I've been a pretty happy renter for all of my adult life, but I have vague and unexplored dreams of buying a home some day. So far, the time has never felt right. But I catch myself wondering if now might be the time. A lot of the people in the class are younger than me, and they're here. I start calculating how much I spend in rent each month, and realize that with today's low interest rates and low home prices, I could probably find a mortgage that would cost me less. I'd plant a big vegetable garden. It's never seemed worth it as a renter - why put all that work into something that's not mine? But what if I owned my house?
I'm entertaining the kinds of thoughts that a lot of folks have these days. At the lunch break, I find Norma Thompson, who works in customer service for a pharmaceutical company. She's smoking on the sidewalk. She says she was tempted to buy a house a few years ago, during Las Vegas' housing boom, but didn't think she could afford it. Now that prices have dropped so much, she thinks she can. "It's scary, but it's a risk I'm willing to take," she says. "I've been renting all my life. I want something of my own."
"Same here," says Bernice Ellis, a retired secretary who lives with her daughter. "Right now we're renting a house. But what you're paying for the house, you may as well have something for yourself." This is what has always inspired people to buy homes, including many of the people who are losing their homes right now. Frankie Rodriguez, a bouncer at a nightclub who's hoping to buy his first home soon, doesn't think he'll fall into the same traps they did. "You got to have discipline," he says. "And you've got to be focused on your goals." Rodriguez has several friends who are facing foreclosure, and he thinks he knows why. "People like to live out of their means. You can't have Moet tastes on a beer budget." It's a feeling echoed by many of the students here. I know better. It will work out for me.
But those who study real estate and the mortgage industry aren't so sure. Vicki Been runs the Furman Center for Real Estate and Urban Policy at New York University. "People have short memories," she warns. Even though banks are being careful now about whom they loan to, and how much they loan, Been wonders how long that caution will last. She says there is reason to be concerned that a new real estate bubble, fueled by a new kind of mortgage product we can't yet imagine, might not be too far down the road.
Been is no critic of homeownership. She sees it as an important way for individuals to build wealth, and communities with roots. But she says homeownership doesn't work unless the homeowner knows what he's doing when he goes into the investment. "Truthfully, it needs to start in grade schools. We need to be taught financial literacy, and given some sense that homeownership is not for everyone."
Homeownership is not for everyone? Those are radical words in America. Nearly 70 percent of Americans own their homes. (That number has slipped in the last few years, as foreclosures rise. In 2005 homeownership had reached a historic high of 69.2 percent. By the end of 2008, it was down to 67.5 percent, according to census data.) Working for a place of your own seems to be part of our cultural DNA. Federal policy over the last two decades, in the hands of both Democratic and Republican leaders, has promoted homeownership as a fundamental good, using things like tax breaks and federal grants for first time buyers, and laws that forced mortgage lenders to relax the conditions on home loans for low-income people.
Renting can have its advantages, though. In a recent interview on American RadioWorks' sister program Marketplace, Edmund Phelps, a Nobel Prize-winning professor of economics at Columbia University, and life-long renter, counted the ways. "If you rent, that's it. You don't have to pay any interest to anybody," he argued. "You don't have to pay any maintenance costs to anybody. You don't have to worry about whether the boiler is going to break down. While if you own your own home, you have a hundred aggravations. Maybe the roof will leak while you're overseas. In strict money terms, there is no reason to think there is a systematic, long-run, sustainable, durable difference between the two."
But if the American dream, or at least a big part of it, doesn't involve buying a house, what's left? Plenty, I am reminded by a guy I met recently named Kianoush Akrami. He immigrated to the United States from Iran with his parents a year and a half ago. They are Bahai, a religious minority in Iran, and the theocracy there forbids the Bahai from going to university or taking government jobs.
Akrami says his family came to the United States for freedom - religious freedom, economic freedom - and opportunity. As soon as they moved to Las Vegas, they got jobs quickly. His mother and father were both tailors in Iran, and now they make uniforms for workers at Mandalay Bay casino and resort. Akrami just graduated from high school, and he is about to take a job at the same casino as a lifeguard at the hotel pool. He is hoping to save enough money to go to college.
So what does the American dream mean to Akrami? It's much more than buying a house and making money. For Akrami, it's about the ability to determine his own destiny. "That I can improve, and that there is nothing that I want to do that I can't," he says. "If I have a goal, and I am trying to reach my goal, and sacrificing for it, I will achieve it."
I should mention where I met Akrami though. He and his parents were at that homebuyer's class I attended. He tells me they once owned a home in Iran, but it was seized by the government. Since they moved to America, they've been renting an apartment, and they want to own their own home again someday. That's a part of their American dream too.
Back to Foreclosure City.