I remember when houses were cheap. People would have these things called “house parties.” Four punks are splitting a run-down house, and they invite some bands over. Flip a mattress up against the door for some soundproofing, plug a microphone into a guitar amp for a makeshift PA, add a keg or a cooler full of cheap beer – party. This used to be a thing. Yeah, it still happens, but not nearly as much as it used to. Slowly through the mid-2000’s, the punks went out and the granite countertops went in. I watched it all happen, kind of baffled. I heard “real estate always goes up” and “you have to buy a house now, or you’ll be priced out forever.”
My posts have all been music related thus far, so this one may seem at first to be a bit of a departure – economics! It has more to do with music than you might initially assume. Musicians gotta live somewhere. Gotta have a place to practice, record, and store your stuff. The more expensive it is, the harder it is to pay rent while losing money on tour. The higher the cost of living, the harder it is to be a musician. I think the housing bubble is one of the biggest things to happen in the last decade, yet it is rarely talked about. But it effected everything, even music.
Look at times when there were exciting things taking place musically – New York in the late ’70’s (the city was a hellhole = low cost of living = good music), suburban garages in the 60’s (parent’s garage = cheap practice space = Back From the Grave Volumes 1-8). Hell, even in Austin (Red River = empty storefronts and crackheads = cheap rent to open a club = Beerland). The cheaper the cost of living, the more money delusional people will have to piss away on their “music careers,” on opening clubs and record stores, and other low profit endeavors. The less a bar owner has to worry about packing the club every night to pay the rent, the more willing he will be to take chances on musical sounds that aren’t “safe.” Sometimes from these circumstances, interesting noises are nurtured.
I grew up on a farm. In the late-70’s and early 80’s, there was a bubble in land prices. My parents bought high. As a kid, I remember the folks talking about how the farm would never be worth what they paid for it. So, because: history, I knew that real estate didn’t always go up. But everybody else went crazy, and suddenly a few years ago crappy houses were expensive like they were dipped in Aztec gold and encrusted with blood diamonds.
In the late 1990’s and early 2000’s, admittedly, I wasn’t paying very close attention to economics. I was playing rock n’ roll and working in a record store, my mind untroubled by the likes of Alan Greenspan. In the mid-00’s, I started to notice a lot of people buying houses, who I wouldn’t have thought would be buying houses. My first assumption was that everybody must have rich parents except me. Turns out that banks were just giving loans to anybody.
An acquaintance of mine, previously a bartender, had just started working as a real estate agent. In retrospect, this seems emblematic of the era, no? I asked her, was there a real estate bubble? Of course not, she said. Real estate always goes up, after all, and I should buy a house now before prices got so high that I wouldn’t be able to afford one, because it’s different in Austin, and everybody wants to live here.
My band had practiced for a long time in a downtown building, used by a bunch of other bands, that stunk like urine. It caught fire, got condemned, and finally collapsed. Suddenly, million-dollar luxury condos were being built a couple of blocks away from this urine-soaked death trap. The prices for regular houses also turned insane. When I first moved to Austin, a “starter home” was maybe 100k. Suddenly, perfectly ordinary houses were going for half a million dollars. Call me crazy, but I still think half a million dollars is a lot of money.
Then, they knocked down the little house next door to me. I awoke to hammering every morning, and eventually a stucco monstrosity was blocking out the sun. When it was finished, it was a massive, ugly duplex, and they were trying to sell each half for $650,000. Over a million for the whole lot.
Meanwhile, my rent had hardly gone up at all. Why would anybody want to spend over one million dollars to buy property next door to me? For the cost of one of those duplexes, I could rent my apartment for 100 years. It didn’t make sense. If wages had been flat or declining since the 70’s, how could housing prices keep rising and rising? How many people would be buying houses that already cost 8 times the average income, and how could it “always go up” from there?
People were watching HGTV, spending their weekends standing in line at Lowe’s and Home Depot to buy supplies for re-doing the kitchen. Buying paint, landscaping supplies, new wainscoting for the den. Isn’t this the kind of thing Tom Sawyer tricked the other kids into doing for him? When I was growing up, these things were called chores, and were to be avoided. Now people’s free time voluntarily revolved around them. People got all weird, creepy, and obsessive about real estate. Just watch this – this was an actual commercial!
I could tell there was going to be come sort of economic Armageddon, and I wanted to understand what the hell was going on, so I started reading up. I read Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds. (You can read it for free online here.) Were we headed for Great Depression 2.0? I read Galbraith’s The Great Crash. Was there going to be hyperinflation? I read When Money Dies by Adam Fergusson. I read everything by Matt Taibbi, discovered Michael Hudson, and plenty of other contemporary works. If you’re interested, Robert Christgau reviewed 10 books about the financial crisis here, and I’ve read a lot of those myself.
Frankly, music has been boring as hell compared to economics recently. Forget music blogs, the essential reading for me has been Yves Smith’s Naked Capitalism, the excellent Dr. Housing Bubble, Eric Janszen’s iTulip.com, and the indispensable Jesse’s Café Américain. So, I wasn’t surprised when Lehman Brothers collapsed in 2008. I was, and continue to be surprised, by how many people never thought anything was amiss, and still don’t know or care to know anything about economics. Hell, people still think real estate only goes up.
After all that reading, what have I gained? Hard to say. For the most part, increased cynicism about our financial and political system, and a desire to avoid debt of any kind. Amazement at the sheer scale and scope of what has to be the biggest asset bubble in recorded history, and at the incredible gullibility and shortsightedness of humanity. Little if any desire to ever be a homeowner with a 30-year mortgage.
I think I am pretty non-materialistic. For an American, anyway. My needs are few, and I can get by on very little. However, I would like to be able to record my own stuff. I just want enough space to set up my one man band apparatus, play loud, and record it live. To do that, I need a room with enough space, far enough away from the neighbors that they won’t call the cops. To have that, you need a house. And houses are still crazy expensive.
So I’m still in no hurry. Remember, not long ago selling real estate was hard, and it will be again: