The Home Owners (1956)

From the September 1956 issue of the Socialist Standard

(Reproduced from the “Western Socialist," Boston Massachusetts, May-June, 1956).

This is the saga of American home-ownership and American home-owners—of that not inconsiderable percentage of theoretical homeowners in the United States who are a part of the working-class. Let us begin with a scientific generalization.

The working-class, we Socialists maintain, is a propertyless class which owns nothing but its labour-power, its ability to produce. In exchange for this labour-power which the workers sell to the Capitalist class they receive back on the average enough of the necessities and the luxuries to keep them producing and reproducing themselves as a class. Home-ownership is certainly not to be figured as a part of the cost of producing and reproducing labour-power.

In the face of appearances, however, this would seem to be rather a bumptious statement insofar as the American working-class is concerned. There is, without doubt, a mountain of paper in the form of deeds and titles of ownership to homes of all types which might be found in the possession of American working -people and the ledgers in the nation's registries of deeds will bear this out. On the other hand, however, there is another mountain of paper in the form of first and second mortgages. liens and attachments and so forth reposing in the nation's banks and finance companies which fairly well serves to uphold the validity of the Socialist claim and which exposes working-class home-ownership for what it is—an illusion.

The “Propertied” Working Class

Since the introduction of the G.I. Bill of Rights which arose out of World War II, nominal home-ownership among the American workers soared. Despite die astronomical heights to which the price of property rose since that conflict, it became possible for a G.I. to purchase a home with a down-payment which varied from nothing at all to a mere 5 per cent. of the selling price. The banks would put up a portion of the money and the Government through its Veterans' Administration would guarantee the rest of it.[1] Nor does the fact that the G.I Bill does not extend its benefits to non-G.I.'s excepting in the case of the numerous instances of artful transfer of such privileges by G.I.'s to others, exclude another large portion of the working-class from the ranks of home-owners. For in many cases at least a large part of a down-payment can be raised by the “buyer” by means of a second mortgage—in most cases a short term loan with a long rate of interest

And so we find that a large percentage of the American working class has become and is becoming “owners” of real estate, even landlords. Just how little average equity the worker has in his home is another matter, however, which does not need too much research to unearth. First of all, we have the first mortgage. An article in the Boston Sunday Globe for June 10, '56 tells us that there is an “unprecedented debt of nearly $90 billions on home mortgages . . ." This mortgage debt, we are informed, “is being repaid by American families with remarkably low rates of fore-closures." Be this as it may, the picture looks something like this:

Let us say our worker buys a home for $10,000 (a pretty shabby sort of deal at today's market) and that he gets his loan at 4½% interest. If he pays $60.00 per month for principle and interest it will take him 21 years and 11 months to pay off the loan.[2] But this is not the whole story by any means, for the city or town gets its cut and in most cases these taxes are added to the monthly payments making the total in this case more like $80.00 per, rather than $60.00, and which also means that the $10,000 home has within the span of a typical 20-year mortgage, just about doubled itself in cost. 

It never rains but it pours

“The course of true love never runs smooth,” they tell us, nor for that matter is the course of a 20-year mortgage any smoother. A home, like its owners, does not get any younger as time goes on. In fact, figures show that almost 50% of them are at least as old if not older than the workers who buy them and in the years to follow there is much to be done in the way of repair. This section is not required reading for those workers who are able, after a hard day's labour at the shop or where have you, to repair or replace the roof, paint the sides, instal or repair the plumbing, heating equipment or electric wiring, build a fence, grow and trim a hedge, etc. This applies rather to the overwhelming majority of our fellow-worker home-owners who are too exhausted, or too inexperienced to do the work of a dozen craftsmen in their spare time. These make the grist for the Home Improvement milk with their "easy payment” plans backed by the Government's Federal Housing Authority or by various Home Improvement Plans sponsored by individual banks. These can tie them up for periods up to five years in amounts ranging up to $2,500 plus interest. Providing, of course, one's credit still warrants such a loan. For those who have slipped and have fallen by the way-side, credit-wise, there are the second mortgage and other types of friendly finance companies which ask no more than an arm and a leg in return for the loan.

In the face of the continuing debt which confronts the worker “home-owner” in the years his mortgage has to run, fortunate indeed is the fellow who does not lose his status and revert to that of tenant in name as well as tenant in fact. In recent years there have been a fairly insignificant number of foreclosures—insignificant when compared with the vast increase in nominal home-ownership. According to the Statistical Abstract of the U.S. for 1955, pg. 457, estimated non-farm real estate foreclosures for continental U.S. ranged from 68,100 in 1926 to a high of 252,000 in 1933 and a low of 10,453 in 1946. The figure for 1954 was 26,211.

This data was taken from approximately 1,400 counties, cities, townships, or other governmental divisions. It represents the number of properties acquired through foreclosure proceedings but excludes voluntary deeds of sale in lieu of foreclosures or defaults on real estate contracts. And this last item is by no means inconsiderable. Anyone who has engaged in the so-called art of salesmanship in the home improvement field has become cognizant of the fact that a not insignificant percentage of "home-owners” become delinquent in their mortgage payments or their payments on the roof, side wall or combination storm and screen windows, with the result that they are either foreclosed or jump clear with a few dollars fa lieu of foreclosure.

That so-called Common Stake

The nominal home-ownership by American workers will no doubt continue and even to expand as time goes on. To a considerable extent and especially in the case of that large number of workers who "own” city tenements, they in effect act as rent-collectors and maintenance-men for the banks that hold the mortgage. It certainly works fine for the Capitalist class to have a working population, a large part of which has such a tangible stake in the nation as a real-estate deed even if the balance on the mortgages, the outstanding F.H.A’s, attachments and liens just about obviate the tide. Anything that adds to the feeling of a common bond between the workers and their masters is a wonderful thing—for the masters; especially when it costs them nothing. To the extent that such "ownership” exists the illusion helps to hold back worker class-consciousness. The working-class home-owner is less likely to favour strong action against his employers in a strike for example. His 20-year mortgage and his F.H.A. notes loom darkly before him and help influence his actions.

This sort of thing, however, can but help to hold back the tide. It can not prevent it from ultimately sweeping in to engulf the Capitalist system, to finally relegate it to the history of past societies. The vast majority of workers, even in America, may aspire to but will not be able to attain even the spurious type of home ownership we have been discussing. Capitalism is a system which provides real property ownership only for the Capitalist class.

Harry Morrison

[1] Last year 30% of all houses were bought with V. A. guaranteed private loans, although out of a total of 14.5 million G.I.'s of World War II more than 10 millions have taken advantage of this feature. (National Real Estate and Building Journal, May, 1956.)

[2] From a table published by “Changing Times" for February, 1956.