Underwater: How Our American Dream of Homeownership Became a Nightmare by Ryan Dezember

My brother tells the story of a friend and his wife who in the early 2000s built their dream house in an upscale part of Oakland County, Michigan. After a few years they decided to relocate. They owed more than the house's market value.

Is real estate still a good investment? Perhaps if you are in it for the long run.

My folks bought a modest house in 1972 for $33,900. Between 2004 to 2005 it's value shot up by 72%. By 2009 when I inherited the house it's value had plummeted by 50%.

We weren't selling. It was our retirement home. Today the value has risen again, neighboring houses selling in the range of their high back in 2005.

Perhaps the house's value will plummet again. Who knows what will happen in ten or twenty years? But if we had not inherited a home, we would be renting. That $1500 a month expense would have made us penny-pinchers in our golden years, just as we were when we were starting out. Living without mortgage or rent has made all the difference.

Ryan Dezember was a journalist covering real estate for an Alabama newspaper when he and his wife purchased a modest home in 2005. Within years the marriage was over, the house up for sale. The house would not sell for what he owed. The housing market had collapsed.

It took ten years before Dezember could unload the house. He figures it cost him $60,000. He understood the real estate business, the deals and flipping that made billionaires overnight--selling housing that didn't even exist yet. Still, he was a sucker for the American Dream of homeownership.

Underwater explains the whole messy, disgusting process that ruined the lives of so many. People like my brother's friends who ultimately told the bank, accept the buyer's offer or we are walking away and you'll get nothing. (The bank opted for nothing.)

After we inherited my folk's house, we spent our days off doing yard work and upgrading the electric and appliances. We walked the dog in our so-to-be-neighborhood, noting the foreclosure signs and sale signs. It was heartbreaking. These same houses are now so hot, realtors are clambering for houses to sell.

Dezember's book is full of real estate details of the transactions in the Alabama beach community he covered. It can be overwhelming! The book is humanized by his personal story. The environmental impact of building on the white sand shore of Alabama is distressing to read.

Dezember notes that 55% of owner-occupied home in the US are filled with people like me--seniors who will swamp the market in the 2030s as they downsize or die. That means our home will fetch far less than it does today.

Should we sell when the value is high and rent?

Since the stock market is also unreliable, selling and investing the money could also be risky.

Underwater explains the real estate game and how people like you and me find our investments gutted overnight. "Banks are amoral," Dezember reminds us. It's all about profit.

I was given a free ebook by the publisher through NetGalley. My review is fair and unbiased.

Underwater: How Our American Dream of Homeownership Became a Nightmare
by Ryan Dezember
St. Martin's Press
Thomas Dunne Books
Pub Date  July 14, 2020
ISBN: 9781250241801
hardcover $28.99 (USD)

from the publisher:

His assignment was to write about a real-estate frenzy lighting up the Redneck Riviera. So Ryan Dezember settled in and bought a home nearby himself. Then the market crashed, and he became one of the millions of Americans who suddenly owed more on their homes than they were worth. A flood of foreclosures made it impossible to sell. It didn't help that his quaint neighborhood fell into disrepair and drug-induced despair. He had no choice but to become a reluctant and wildly unprofitable landlord to move on. 

Meanwhile, his reporting showed how the speculative mania that caused the crash opened the U.S. housing market to a much larger breed of investors.
In this deeply personal story, Dezember shows how decisions on Wall Street and in Washington played out on his street in a corner of the Sunbelt that was convulsed by the foreclosure crisis. 

Readers will witness the housing market collapse from Dezember’s perch as a newspaper reporter. First he’s in the boom-to-bust South where a hot-air balloonist named Bob Shallow becomes one of the world’s top selling real-estate agents arranging condo flips, developers flop in spectacular fashion and the law catches up with a beach-town mayor on the take. Later he’s in New York, among financiers like Blackstone’s Stephen Schwarzman who are building rental empires out of foreclosures, staking claim to the bastion of middle-class wealth: the single-family home.

 Through it all, Dezember is an underwater homeowner caught up in the mess. 

A cautionary tale of Wall Street's push to turn homes into assets, Underwater is a powerful, incisive story that chronicles the crash and its aftermath from a fresh perspective—the forgotten, middle-class homeowner.