I have owned five homes. My first home was purchased about 18 months after university graduation. My first wife and I barely scraped enough cash together to make the 5% down payment to qualify for a mortgage loan. Mortgage interest rates were over 16% due to the post-Carter administration high inflation rates. The home was a new three-bedroom starter located in a northeast Houston suburb. Homes were not selling due to high interest rates, so the builder reduced 3% of the interest rate which helped get us approved. Luckily, mortgage rates dropped over time, and we refinanced the home with an adjustable loan. We decided to make additional principal payments and after thirteen years, we paid off the loan. I was then transferred to London, and we sold our first home, unfortunately without a capital gain. Home builders had plenty of inexpensive land to supply the growing Houston market.
Three years later, we returned to Houston and decided to move back to the same suburb. We bought another new, more spacious home for our growing family. We used our first home’s equity that was more than 50% of the second home’s value and obtained a reasonable mortgage. Seven years later and another transfer to Europe, I sold my second home in two days for a modest capital gain. Market timing was in my favor this time.
Upon returning to Houston two years later, my wife and I bought my third home in the same suburb. This time, we splurged on a five-year old home located on a golf course. It was larger than our needs but had a beautiful view. We built a pool and redesigned the landscaping. Our small mortgage was paid off in three years. Interest rates were low as inflation was near zero. We thought that we would stay in this house until retirement, but after 3.5 years, we were transferred to London. We decided to keep the home while in London as we assumed that we would return in a few years and we wanted to regularly fly back to Houston to see family. After two years, we decided not to retire in Houston and put the home up for sale. It sat unsold for over a year as the US was experiencing the great recession. We finally gave in and lowered our price below the purchase price to get it sold. Supply and demand were not our friends this round. Later, in 2016, the house flooded during Hurricane Harvey, so we did dodge this catastrophe.
We decided to relocate to Austin and purchased a central Austin tear-down home, then contracted with an Austin builder. We worked with an architect and interior designer to create our new home. We broke ground in 2013, and the home was completed in 2014. Building a home from scratch is far more complicated than purchasing an existing home. However, the home reflected our needs and tastes. We did not need a mortgage, and I was pleased to bypass the banks. Timing worked in our favor as the country was coming out of the great recession and demand for Austin homes exploded. Currently, the Austin housing market is in a slump. The housing cycles continue.
After forty years of buying and selling property, I have come to appreciate the value of home ownership, both as a consumer and as an important right in our democracy. In Chapter 3, titled The Community and Property, of Dr. Reinhold Niebuhr’s 1944 publication, The Children of Light and The Children of Darkness: A Vindication of Democracy and a Critique of its Traditional Defense (The University of Chicago Press, Chicago, IL, 2011), Niebuhr stated that “the ‘I’ is so intimately related to the ‘mine’ and the ‘thou’ to the ‘thine’ that relations of accord or conflict between individuals usually imply questions of property.” (pages 86) Democracy and property rights are intertwined. For Christians, private property is “a necessary evil, required by the Fall of man.” (page 91)
Niebuhr wrote his book during the rise of communism and communal property. He juxtaposed this trend with Calvinism which “laid the foundation for the hypocrisies of bourgeois and plutocratic idealism in which charity became a screen for injustice. These hypocrisies deserve all the strictures which have been levelled against them by sixteenth-century sectarianism and Marxism.” (page 95) He derides Marxism where “too much wealth is heaped up in capital investments and too little is distributed for consumption.” (page 104) In addition, the Marxist leaders grew rich and powerful while their fellow citizens lived poor — equally poor.
Niebuhr labeled liberals and Marxists as ’children of light’ because of their property errors. “Neither understands property as a form of power which can be used in either its individual or its social form as an instrument of particular interest against the general interest. Liberalism makes this mistake in regard to private property and Marxism makes it in regard to socialized property.” (page 106) He spends much ink writing about the flaws of both. Therefore, Niebuhr advocated that civil government must “’preserve the property’ of each member because he [the citizen] can no longer preserve it by his own right. … Property, like every other form of power, is both defensive and offensive; and no sharp line can be drawn between its two functions” (page 108-9)
Niebuhr does not offer solutions for the flaws in property rights within the democratic process. He states that the debate continues and democracy is the best system to continually perform adjustments. He summarizes this chapter by stating: “All property is power; that some forms of economic power are intrinsically more ordinate than others and therefore more defensive, but that no sharp line can be drawn between what is ordinate and what is inordinate; that property is not the only form of economic power and that the destruction of private property does not therefore guarantee the equalization of economic power in a community; that inordinate power tempts its holders to abuse it, which means to use it for their own ends; that the economic, as well as the political, process requires the best possible distribution of power for the sake of justice and the best possible management of this equilibrium for the sake of order.” (pages 117–8)
I will next discuss Chapter 4, titled Democratic Toleration and the Groups of the Community.
