Scenes from a housing boom

At the height of the real estate bubble, I was desperate to buy a home. I had no idea what kind of trouble I was borrowing.

By Mary Elizabeth Williams

Senior Writer

Published February 28, 2009 5:43PM (EST)

In 2003, after leasing a charming but erratically maintained Brooklyn brownstone for several years, my family and I decided to attempt the impossible -- to become homeowners. But two years later, with nothing to show for our efforts but a lot of cancelled rent checks, we were still searching. The Brooklyn we had originally fallen in love with was disappearing under new construction and chain stores, and the housing market was more out of control than ever. Then a reconaissance trip to a new neighborhood, in upper Manhattan of all places, gave us fresh hope. The only question now was -- had the bubble inflated too far beyond our means?

We are feeling optimistic enough about our prospects that Jeff meets with our accountant to get a clear sense of our finances and possible down-payment picture. I was supposed to be there too, but our daughter Lucy is home with an ear infection, so I'm doling out penicillin and running an all-day "Wizard of Oz" festival instead.

Our accountant makes me tense. When I'm around him, I feel judged for how little I make, ashamed that I'm not performing up to expectations. The last time I was in Laurence's office, he bluntly demanded to know why we weren't saving more. I told him it was because we weren't earning more, and I felt thoroughly mortified about it.

I'm cranky and edgy all morning; between the feverish child and the whole unceasing trying-to-uproot-our-lives thing. The ring of the telephone doesn't make it better.

"We may have to wait a while," Jeff says gently. "Laurence says that most co-ops will ask for 20 percent down, and we don't have much liquidity. He thinks we should try to put a thousand away every month for a year."

"Well that's bullshit," I whisper as Lucy naps, "because housing is going up faster than we can keep up. Does Laurence know that? Does he read the papers? What good does it do to save $12,000, even if we could, which we can't, when a place that's $350,000 now will be $70,000 more in a year? Did you tell him that interest rates are going up? Did you tell him to go blow himself?"

Jeff informs me he did not.

Then I can't talk anymore. "I have to go," I say, and I hang up and put my head in my hands for a long time.

It's not that I think buying a home will make us happy. I do believe it will make us more secure. And the thought of not having that security makes me sad. A home is not like wine. Its intrinsic merit does not increase with time. Its value is whatever the market says its value is. Part of the terror and the thrill of real estate is how much of it rests on the "bigger fool" theory. You buy at a certain price, then you find the sucker who will buy it from you at the most obscene markup. Then that person can turn around and do likewise. None of the houses in Carroll Gardens, the Brooklyn neighborhood where we live, have changed radically in the last three years. The perception of their worth, however, has, to our utmost exclusion.

"It's never going to happen," I say dejectedly to Jeff that night as we curl on the couch. "We're giving our landlord over $20,000 a year to pay off her mortgage. We're living in her house; we have to tell our kids they can't play in her front yard. I want our money to be going to us, to our home. We have nothing."

Finally, he speaks. "I guess I didn't think of it that way. I thought you save up and buy when you're ready. The bubble makes you rethink the idea. Everything's moving further and further away faster and faster. And we're watching it happen."

The next week, my friend Sharon calls to say that she and her upstairs neighbor are combining forces for a stoop sale on Sunday. They are motivated by the fact that one of the city's biggest real estate firms is having an open house for the monstrous condo that's going up down her street, and, as Sharon explains, "I want to know which member of the Strokes is moving to the hood now."

When, four years ago, our neighbors Jennifer and Vincent bought the three-family brownstone where Sharon also resides, they paid $780,000. A year and a half ago, developers bought the sixties-era eyesore a few doors away that was going for a million. Then the buyers razed it and for the past year have been banging and clunking around the clock to build something new.

It now vaguely resembles the other structures on the block, in that it's brown, and stone. The McLoft also has enormous windows and imposing silver columns. Henry James has collided with the Enterprise. Sharon and I stand outside with our jaws slack. "Who designed this thing?" she asks. "Mies van der Douche?"

Although the building, which now has a European name and a Web site, is still very much a plywood-enclosed husk, units are officially on the market. The top floor is going for $1.2 million. Most of the other units come in at the million-dollar mark, but a 675-square-foot one-bedroom can be snagged for half that price.

Sharon reasons that the foot traffic to gawk at the open house can only help her move her castoffs. She puts up a yellow sign on Court Street, halfway between the subway exit and the new building. "Here to buy a million-dollar condo?" it reads. "Perhaps you'd also like my used dishes."

The girls and I come over for the afternoon, toting some barely used books and baby clothes. We're presumably there to help, but really we're in it for the freak factor. The locals provide plenty, including the old guy who pokes hopefully at my cleavage and asks, "How much for that?" and the woman who tells us she makes wedding clothes. For dogs.

Our attention is mostly on the people wandering in and out of the building. "I don't know how long we are for this street," I sigh as an impossibly well-oiled couple in complementary shades of Gucci glances at us and promptly retreats back up the street. "We're white trash, and everybody sniffing around is Eurotrash."

Eventually, Vincent and Jennifer, bursting with curiosity, go over to check out the property. Their cover story is they want a pied-a-terre for his parents. They return a few minutes later with a thick folder of floor plans and prices. "They've already got offers on the one-bedrooms," Vincent says, dumbfounded. Then he adds in a confidential hush, "You know, Ava died." I'm drawing a blank who Ava is.

"The old lady across the street," he says, pointing to a massive structure twice the size of his brownstone. "You'd always see her outside sweeping."

"That's too bad," I say, pausing a beat before adding what I know he's waiting for. "So what's happening to the building?"

Jennifer is trying to be dignified. "A woman has died. Vincent, this isn't right to talk about."

He and I shrug. "I'd like to sell this place and buy that," he says, eyeing the building with the same appreciative twinkle that old guy had when he surveyed my rack.

I feel sorry for the old ladies of Carroll Gardens. The minute any of them gets a cough, you can almost hear our speculative palms rubbing together in anticipation.

We're doing a brisk stoop sale business when a khaki-wearing poor man's Jeremy Piven bounds energetically from the condo. He looks dismayed at our assortment of fondue sets and Pez dispensers, and the sight of Lucy in ornate sunglasses and me in a $5 pink wig.

"You should give me a cut," he huffs, "because I own that building."

We have spent the afternoon depreciating property values. Which, given how the last few years have gone, is rather satisfying.

Sharon and I immediately begin making plans for the next open house. They involve radios, lawn chairs and wine coolers. Sadly, our plans never come to fruition -- almost all of the units go into contract the first weekend.

I have been feeling particularly class-conscious ever since Lucy started kindergarten a few weeks ago. Her school has lost its Title I funding this year because not enough underprivileged kids go there anymore. What's the side effect of an influx of wealth? Your school relies on parents to supply basics like paper towels and markers, and the music programs you had last year are no longer available.

In their stead, a stream of transplanted young Manhattanites and their helicopter moms whirr around the schoolyard. I watch newcomer parents converge in a clusterfuck of anxiety and fret that their Fletchers and Bathshebas aren't being challenged enough by the kindergarten curriculum. The moms who grew up in the neighborhood, meanwhile, clump together at the gate and smoke. Across the jungle gym, the two tribes eye each other suspiciously.

"If the parents want extra programs," says a reed-thin woman who swapped her Greenwich Village condo for a brownstone, "why don't they do what we did at Ajax's old school and have every family kick in two or three thousand dollars at the beginning of the year?"

I am standing outside at morning dropoff with several other demographically challenged parents. A strangled sound rises unbidden from the back of my throat.

"I mean, it would be voluntary," she hastens to add.

Later, I'm in the park with my friend Geri and our spawn. I'm talking about the weekend and the million-dollar condos and the fancy new crop of families at the school when I find myself off on a rant against rich people and their designer diaper bags that starts from my toes and gushes forth like a Vesuvius of resentment. "These douchebags come in and ruin everything. What is it?" I ask. "Why do they make me so crazy?"

Geri, with all the wisdom of the Dalai Lama if he'd grown up over a bar in New Jersey, fixes her gaze on me. "Do you know any rich people?" she asks.

I ponder this. I have a suspicion a few of our friends are wealthier than they let on, but actual, three-kids-in-private-school, wheeeee-I-have-so-much-money rich? "A few," I tell her.

"They're all assholes, right?" she replies. I have to admit she has a point there. "You don't get rich enough to buy a house in this neighborhood today unless you're fucking people. So when you see somebody pushing one of those $800 strollers, you know it was paid for by fucking people. That," she says with a flourish, "is what you hate." I'm sure there are very decent people with expensive strollers out there, but I find Geri extremely validating.

Our family is on the A train again, en route to an appointment with Lara the broker. "I want my borough back," Jeff says.

"That's why there are five," I tell him. "One of them's bound to pan out."

The last time we were here, Jeff and I zipped around in my mother-in-law's car on a sunny Sunday, listening to the radio and feeling good.

Today, I am less certain what we're doing here. Lara shows us two apartments in Park Terrace. Dark. Tiny kitchens. Grim. We know the drill. The pizza we have for lunch, however, is as good as anything I've ever tasted in Brooklyn. Afterward we take the girls to the park, where they run around giddy at the novelty of a simple expanse of grass.

"If we could have this," Jeff says, "it might be worth it. We could have picnics. We could build snowmen here in the winter." He is open to the possibility of a place with some wide-open spaces. I am ready to claim considerably less.

A few weeks ago, I bought a latch lock for the bathroom. It's simple enough to brace my feet at the door to keep out wandering offspring and distracted spouses if I'm sitting on the toilet, but an uninterrupted shower has, until this point, been impossible. One short trip to the True Value and four dollars later, and I have bought back some measure of my modesty.

The bathroom is, in other people's homes, a sanctuary. In ours it's an asylum. It's the room Jeff retreats to when he needs to do a freelance job and I'm dying to watch a movie. He hauls in a TV table, puts down the seat, and gets to work. It's where I go to break down when it all gets to be too much, this stupid windowless room with an unholy water stain on the ceiling and a ghastly brown linoleum floor. During the girls' birthday party, when I got a work-related call, I flipped on the vent and threw my weight against the door, bravely attempting conversation while fighting off a horde of five-year-olds with full bladders thumping on the other side.

In 1950, the average American home was a modest 983 square feet. In 1970, it was 1,500 square feet. Today the figure looms close to 2,500 square feet. I don't need my own wing. When I cruise through New Jersey, I shudder at the houses on steroids dotting the landscape. I see circular drives and enormous windows, revealing the chandeliers and grand staircases you can see all the way from the turnpike. They don't look like homes. They look like somewhere to have a prom.

But the limits of our space, the blatant absence of privacy, they're the things that make me feel small and self-conscious when our friends with real homes come over. Beatrice sleeps in the crib an arm's length away from our bed. Lucy is a few feet farther away, in her 8-by-12 room with no door. We have four human beings vying for space in this tight yet wide-open unit.

We have plenty of company. There's the couple we know in a tiny one-bedroom who sleep on a futon while their twins share a loft bed. There's the family who moved the fridge to the living room to make space in their cramped kitchen. There's the divorcee who lives with her mother in the apartment she grew up in. In other cultures these arrangements are what pass for efficiency and intimacy. This, by the way, is why we couldn't cut it in other cultures. We all stay because we can't afford to buy and we can't bear to leave. But who among us would mind not having to hide in the toilet for a few minutes of time alone?

On Monday, I call Roz, the mortgage broker. The last time I spoke with her, I figured our search would be challenging but not interminable. I thought she'd be helping us put together a mortgage in a matter of months at the outside. That was two years ago.

I update her on our lives and savings and tell her, "We've zeroed in on a neighborhood we like. I think we'll be able to make an offer on something soon. Tell me what we need to do."

"I'd recommend doing a no-doc mortgage for you," she says. I have never heard the term before. No-doc I learn, is short for "no documentation."

If subprime loans are the catnip of borrowers with spotty credit, no-docs -- and their slightly more forthcoming kindred, stated income low-docs -- appeal to people with good credit but fluctuating income. That's why they're also called "Alt-A loans" -- alternatives for people with A-level credit.

Lenders, as a general rule, want to do business with people who draw steady paychecks from a verifiable employer. Jeff has lost a job in the past year, freelanced, and is now working as an in-house independent contractor. I have a half-time job and I freelance. We're financially stable, but on paper, we appear all over the map.

Where there's money to be made, however, the lending industry will find a way. With the particular form of no-doc Roz recommends, we wouldn't have to provide the banks with the cruel minutiae of our careers, just our incomes and credit history. In exchange, we'd likely pay a slightly higher mortgage rate. It's a lending version of "don't ask, don't tell."

I am choosing to look at this as the industry's way of giving those of us who aren't traditional nine-to-fivers a shot at home ownership. If we do it right, it'll all come down to what we have in the bank, which still isn't all that much. Roz also tells me we should aim to put 10 percent down. No less, because most co-ops and condos won't accept it, and no more, because we don't have it. The median first-time homeowner down payment this year, meanwhile, will be just 2 percent.

"I don't like to waste my time," Roz declares in a firm tone, and I can feel breakfast rising in my throat. Then she adds, "I don't think I'm wasting my time with you. I wouldn't talk to you if you couldn't do it. You can." I don't know what will come of any of this, but it occurs to me that this woman may have changed my life.


By Mary Elizabeth Williams

Mary Elizabeth Williams is a senior writer for Salon and author of "A Series of Catastrophes & Miracles."

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