Mortgaging the American Dream: Joshua Specht on the Rise & Fall of US Homeownership

00:00:31 Andrew Keen: Hello, everybody. As always, I'm talking to you from San Francisco in California, where there's a housing market boom. Wealthy AI workers are sending San Francisco house prices soaring according to the BBC. There's even a mansion shortage given all the money around in the system. A lot of people are very concerned. The mayor of San Francisco has declared a rent emergency, admits, at least according to the New York Times, the AI housing frenzy. The price of housing and rent isn't only an issue in San Francisco. Something similar is happening in New York where housing affordability is drawn bipartisan attention. In other words, property values are political, they're economic, and perhaps they get to the core of all the promise and, problems with the American Republic. That's certainly a theme, in a new book by my guest, Joshua Specht, who teaches in Indiana and is talking to us from South Bend in his new book, Property Values: The Rise and Fall of the American Homeowner. As I said, Joshua is joining us from South Bend, Indiana. Joshua, as we joked earlier, housing prices in San Francisco are quite different from South Bend where you're talking from. Why is that? Why is housing so expensive on the coast, particularly in San Francisco and New York?

00:02:15 Joshua Specht: Yeah. I think this question gets at the heart of what I'm trying to explain in my book, which, of course, is a long history of this, but helps to explain what you just asked. I really liked how you referred to the promise. How did you say? The promise and problem of the American republic?

00:02:29 Andrew Keen: Yeah. All the promise and all the problem.

00:02:31 Joshua Specht: I think that really gets the heart of what I'm saying. To answer your question more narrowly, like, it's expensive in places where exciting, important things are happening, where people wanna live. So that's the first thing. Right? Their places of opportunity often have these challenges. Now what the book tries to tease out, though, is in addition to those challenges in specific places, right, there's a particularly American story to housing where one's claimed housing or the ability to own housing is often understand to be central to the success or the legitimacy of the American kind of state or nation. And that means that we've prioritized a particular model of ownership, that can be very supply constrained. Similarly, I think that in the twentieth century through today, home value became many Americans' most valuable asset. Now this is a little different if you're having a mansion shortage. But when it's something that valuable to most Americans, right, their home value is the biggest number they deal with in their life, well, they're gonna take steps to protect it, and they take steps to protect it by constraining housing supply. And you get problems like you have in San Francisco. It is a lot cheaper here in South Bend, but it's gotten a lot worse since COVID, certainly. So it's a problem basically everywhere. And last thing I'll say is, as the book suggests, when it is a problem and people feel like they can't afford their housing, which is a problem for society, for politics, for culture, and for our economy.

00:03:55 Andrew Keen: As you say, you're a historian in this new book of yours, Property Values: The Rise and Fall of the American Homeowner, is a history of, American land, American homeownership. To what extent should we be understanding all this, Joshua, in terms of the colonial origins of, the settling of the United States, the appropriation, of course, of land from Native Americans? Is this the cornerstone, the beginning, the foundation of understanding American homeownership?

00:04:30 Joshua Specht: I'd say so. I mean, I think you don't if you're just worried about housing prices in San Francisco, say, or, I mean, anywhere expensive today. How much do you need to appreciate that history? Well, I think to understand America, you need to understand that what made all this possible was taking vast quantities of land, and there's a lot that helps explain American prosperity. Now what's key to what you asked though that I think is really important is the colonial legacy of how we thought about the meaning of land ownership. Because the theory that underpins a lot of America from the colonial period from the revolution to today is the idea that to have a functioning thriving democracy, you need to have widespread ownership of land or a home is the kind of modern way of thinking about that. That theory is not uniquely American. Right? That theory goes back to Europe. Right? It goes back to before the United States existed. The problem was, if you're in Europe, you can't do much with that theory unless you're already wealthy or you're an aristocrat. Right? There's not a lot of land to go around. So people there are theorists where people, you know, people like Locke, philosophers, were thinking through, can we have a mass democracy? But America is a settler-colonial place. It was a place they could put it into practice. You could say, let's try it. You know? Let's distribute land widely or have what diffuse land ownership, and that might make a new kind of country possible. It did. And ever since then, the legitimacy of what the whole American project depends on continuing to meet that bargain. And you needed the land to do it, but then today's version of this problem of lack of land is obviously the cost issue.

00:06:02 Andrew Keen: Yeah. I like the way you put it. America as a Lockean laboratory given John Locke's theory of individualism and self-creation was rooted in land. So where would we begin? Do we begin with the Homestead Acts of the nineteenth-century, which guaranteed land and homeownership to many new and old Americans?

00:06:29 Joshua Specht: I think it's a good place to start. I mean, I think we start with how that succeeded. So the Homestead Act was one of the farthest reaching and most creative laws or policies in American history.

00:06:42 Andrew Keen: This is of a as eight at least according to Wikipedia of 1862. Right?

00:06:48 Joshua Specht: Yes. But they've been trying it for a while. This is key. So since the creation of the United States, there were rival visions of what the United States could be. Now most peep many people are familiar with the story of the American South and plantations and slavery. So that was one vision. There were other visions that were more aristocratic in the Northern United States, like vast estates with, you know, almost like feudal barons who would rent their land. But many Americans embrace this idea that we should have farms, that all Americans or many Americans should have a 160 acres to call their own. It would be a version it'd be kind of like an early capitalist division that you would sell your crops on the market, but you would have this land to call yourself. And in the face of people who said, well, we should sell this land slowly. This is a valuable asset. You know, we can raise money for the government of this. Other people said, no. We need a radical vision of giving this to people. And relatively cheaply, very cheaply. If we give people this basically just a title fee, this will revolutionize the country. And so the vision of the Homestead Act coupled with just the availability of land more generally, that's kinda, yeah, where the story starts and where the story of kind of mass American democracy really takes off. Now in the book, I trace lots of problems with how this plays out. But I think there's a lot to the vision and a lot to the ambition. And I think losing some of that ambition in our ideas about housing today is at the core of some of our problems.

00:08:04 Andrew Keen: Yeah. I wanna come to those problems later. So are you arguing that the Homestead Act was generally I mean, I'm guessing it wasn't very good news for, indigenous communities, of course, who had different conceptions of ownership and different ideas of the land. But, generally, the Homestead Act was a success. Is that fair?

00:08:27 Joshua Specht: Yeah. It's a great question. So the public has always, to the extent they know about the Homestead Act, thinks of it as a great success and, like, one of these great moments in America. It had a pretty bad reputation with historians until relatively recently. Some historians I talk about in the book who really focus on the Homestead Act, have kind of resuscitated a bit, and I kind of buy their ideas in my own reading as well, which is just like for instance, to explain, like, there was lots of corruption. A lot of people cheated the rules on their land. A fair few farmers went out of business. But people recently have said, well, hold on. They were cheating a bit so they could keep their farm. So even though there was some fraud involved, well, the end result was, like, people got a little more land than 160 acres, but it made it possible to have a farm. Or they went bankrupt, but that's ignoring the fact that they held on to the farm, or they sold their farms. Sorry. They held on to it until they could sell it. Or even the ones that went bankrupt, that was decades. So I think it was a bigger success, but I also think it's not just a success in terms of the kind of, like, on the ground history or, like, people's lives, but also in the vision of what it means to be American. So it's kind of a success in kind of locking in this idea of ownership that becomes a powerful political kind of language and vision from 1862 onwards.

00:09:39 Andrew Keen: You know? Was there Joshua, again, I'm thinking out loud here. Was there resentment on the part of landowners in the settled East or even in the South towards the idea of new immigrants getting land for free or cheaply?

00:09:58 Joshua Specht: I wouldn't say there was resentment. Now, politically, there were tensions over it, if you think about, like, you're a senator in New York or something. And then we're leaving off like, they passed us during the American Civil War. So the Confederate vision and the southern vision of slavery always was against this, but we won't talk about that because they're being they're not part of the story right now. But there was it wasn't so much resentment. And the reason why, I think, is telling is that Americans in general were extremely worried about immigration and its connection to landlessness and urban poverty and disorder. So people talk kind of about a safety valve theory of cities, but people did kinda believe this idea that, like, to the extent New York had social problems, people, rightly and wrongly, believed they could be solved by people having land. So to that extent, there wasn't a lot of resentment, because it seemed like it was solving a social problem.

00:10:49 Andrew Keen: Although we got a an upcoming show, about, Martin Scorsese, of course, who came from Sicily, a classic Sicilian story. All his relatives and indeed many Sicilians that end up in New York. In terms of the Homestead Act and the people who benefited from them, can we make racial generalizations, cultural generalizations? I'm guessing that black Americans didn't benefit from it. Of course, the indigenous communities didn't either. Was it mostly a white American thing, maybe a northern European thing?

00:11:27 Joshua Specht: Well, there's a lot to be said with it mostly. First of all, for native peoples in the United States, this was a big loss. I mean, there was already—

00:11:36 Andrew Keen: put it mildly, Joshua. It was a catastrophe. Right?

00:11:40 Joshua Specht: Apocalyptic for sure. And what's even more interesting is later, reservations are broken up further under the logic that if we give native peoples by force a 160 acres, they will become like Americans. And that theory also means that any extra land that's available, they take away and sell to people. Right? So but there's a theory there, and it combined with a great deal of greed. So but the many of the beneficiaries, yeah, are the kind of nineteenth-century, immigrants, people arriving in the United States at this time. A lot of germ people of German ancestry, Scots Scandinavian.

00:12:11 Andrew Keen: I mean, it was a settling of the Midwest.

00:12:13 Joshua Specht: Northern Plains. Exactly. It you know, Italians, they're coming a little later, my guess. Scorsese's family. I don't know the exact specifics. Right? But that's a kind of later wave. They really benefit from things like suburbanization. But to your point, many black Americans were now they know the financial means. There were ways in which this didn't play out for them fully, but there were many who were able to kinda participate in this. And, actually, the book talks about a community of mostly people who had formerly been enslaved in northwestern Kansas, a town called Nicodemus. And, basically, the story of that town is actually almost like any other story of a town on the plains, which is that there's enormous possibility, and then they have this fight with the railroads, and they have all sorts of trouble making it as farmers, actually. But that story was kind of pretty widely, shared.

00:12:58 Andrew Keen: Was there, though, even in the case that you talk about the African American town, was there a degree of formal or informal segregation?

00:13:09 Joshua Specht: Yeah. I mean, yes. In part I mean, if you think about how settlement patterns work in general, the town of Nicodemus had, was surrounded by some white communities as well. Racial tensions around those areas at that moment were actually somewhat lower if you think about people were settling this in the aftermath of the war, and they were mostly concerned with making it as farmers. A lot of the racial animosity kind of takes off later in the story. But, yeah, I'd say so. And the bigger thing is that, you know, if you even though it's, like, pretty much free to get this land, you have to pay to get there. You have to survive as a farmer for a year before you can sell your first crops. So if you think about populations that haven't had wealth historically, they're not gonna have a lot of opportunities to kinda make it.

00:13:53 Andrew Keen: It's a cliche that, we talked at the beginning about this crisis of homeownership. We'll talk about it in more detail later. Has this always been a feature? I know you begin the book in part with, the Anti-Rent War, which I didn't know about, between 1839 and 1845. If you'd have asked a typical American in the middle of the nineteenth-century, what would they have said about the price of real estate, either buying or renting? Is it the kind of thing where people always think things are bad, that there's always a crisis?

00:14:30 Joshua Specht: No. Not at all. I mean, the your point about real estate, it's an interesting one. I it would like, today, it would kind of vary a lot depending on where you were. I think if you ask someone at mid century, they would say there's a lot of opportunity. And if you ask a person in the North, as long as, right, those slaveholders in the South don't get to put their vision of what America should look like. Like, there is possibility in America, great opportunity as long as it is a kind of a nation of free soil. Free farmers. Right? Not in not plantations. So now your point is really interesting one about, like, is it like there's always a crisis of homeownership? You know? Historians have talked about in an unbelievable way, like, there's always a crisis of masculinity. Like, there's always some sense of which what is it to be a man's change. And—

00:15:17 Andrew Keen: Or inequality. Or inequality.

00:15:20 Joshua Specht: I would I wouldn't actually see perpetual crisis, though, in this ownership. I would see kind of contested visions for what the United States would be until that Homestead Act moment during the American Civil War when it becomes clear that this model is gonna take off. And then for there's a good decade where things aren't I don't think it's easy for anyone, but the idea of possibility and this kind of, like, dreaming big actually keeps people going pretty well. It's not until the eighteen nineties or eighteen eighties, eighteen nineties when crop prices go through a real long-term deflationary process that people are like it's not so much a crisis of land prices, but it's a crisis of the model of, like, just you can survive by owning a farm. And so then it ends into crisis. Then they kind of rebuild it, and it's kinda blue and bust. Then there's the kind of vision after World War Two of the suburbs, which are going great until the seventies when we get a new crisis. Probably, we've been in crisis now for a while. But, you know, the nineties were a time of nineteen nineties were also a time of reversal. So I think it's a little bit boom and bust, but I think it's an interesting one. And I think the politics today are set up such that I think we're probably in perpetual crisis.

00:16:24 Andrew Keen: So back to this Anti-Rent War. Yeah. Which was it, and why is it significant?

00:16:32 Joshua Specht: Why is it significant? Well, I'll start with a kind of I think it's a good story for one thing. So I think it's significant when you have a good story because it gets people thinking about the things that are significant. So I use it as a hook, But why do I think there's something deeper than that it's a good story? Well, because it was an alternate vision that people might not think of. So the Anti-Rent War was basically it's something extremely unusual in the early United States. There were a few massive estates in Upstate New York. So the Van Rensselaers, that might be a name people may be after.

00:17:05 Andrew Keen: Probably the Roosevelts as well.

00:17:07 Joshua Specht: Yeah. And the Livingstons. And but we're talking really, really big. You know? And tens of thousands of tenants. Thousands and thousands of tenants. Far families, I should say. And so they had a vision that prospering the United States would be restoring a kind of aristocratic vision of the United States, an aristocratic vision of the world. So, like, gentlemen farmer landowners would introduce scientific agriculture, disseminate it to their kind of quasi feudal renters, and then everybody would prosper. And they would iterate that across the country. For various reasons about how settlement works, this isn't really that sustainable. But I zoom in on the story of the tenants on, in Upstate New York to see, like, the moment where they say, no. This is not the acceptable vision of the United States. Like, the vision of the United States should be the vision of the small farmer or the small landowner. And so they rise up, and their grandfathers, in many cases, were tenants in these farms. They issued their own declaration of independence on July 4, 1839. I think that poster you were showing on Wikipedia page is actually referencing the meeting where they issue that. There we go. You see it right there?

00:18:11 Andrew Keen: Yeah. "Attention, anti-renters! Awake! Arouse!" So it was a populist instinct in some ways.

00:18:17 Joshua Specht: Oh, for sure. And it's a wild story. I mean, you know, it they basically stop paying rent, violently resist the collection of dues. When sheriffs try to seize land and auction it or evict people, they assemble mobs and, you know, threaten them, tar and feather people. They their company will get killed. And what happens is, ultimately, this kind of civil war, very low grade, they their vision wins because the politics of New York, anyone who wants to get into office starts to realize, well, maybe I gotta appeal to these people. And maybe this kind of populist impulse, we expand the franchise to them. They'll vote for us. And all of a sudden, these, giant manors, essentially, become a model that doesn't work, and everyone sells out and stops doing it.

00:19:04 Andrew Keen: And then Joshua, do you see this more in terms of, perhaps, shall we say, conservative Jacksonian populism or more Mamdani-style progressive populism?

00:19:23 Joshua Specht: I like that. I mean, it's definitely Jacksonian in terms of its vision of how society should be organized, its vision of independence. Right? The kind of populist politics of someone like Mamdani, because it exists in the twenty first century, I think, is a lot about thinking about questions of interdependence and what are our obligations and what's the state's obligations. Right? These people are in some ways very interdependent, but the thing that they think of first is independence. And, they have an ideology of what's known in the nature of producerism. Like, you the people who have claims to things are the people who produce things and work. That resonates today, but I think that emphasis on independence, which in the book I think is a it's a little bit it's not entirely real, but there's something to it that's very different than how people might there are certain kinds of populism today. So it is more of a concern more akin to this conservative populism, but, yeah, that's kinda how I would think about it. But it's an interesting way to frame it. I need to this is why I need to talk to more people who aren't historians because these ways of putting in this frame really is, generative.

00:20:35 Andrew Keen: Well, let's go back to the Homestead Act. You said it was mostly successful, except, of course, for indigenous for the indigenous peoples. And then we have maybe is it the late nineteenth-century, a period of great economic decay as a consequence of the eighteen seventy three crash, which we've talked about on the show in the past. Then there is, of course, also the dust bowl and the various environmental crises of the early twentieth century. How much does this affect, Joshua, the sense of land ownership, these separate crises? Do they all come together at a particular moment?

00:21:16 Joshua Specht: They do, and it's a disaster for them. So in the by the eighteen nineties, I would say, you know, the United States economically now there are crises that are severe. But if you if we were to, you know, just kinda zoom out a bit, the United States is taking over. So they start to lead the world in industrial production. But important, the whole conversation has been about the importance of farmers to the nation. United States is taking off as an industrial country. Right? Miles of railroad track laid. Agriculture is becoming highly efficient and productive, but that's because farms are bigger. The big ones are producing more. There's more capital investment. Like, there's more machinery. The little farmers is falling apart. So at the same time, in some ways, the United States is taking off. This whole vision that everything was predicated on before is falling apart. You can't make it as a as an independent farmer. And farmers aren't independent. They depend on the market. The prices tell them how to live. And so it does limp along in part because around in the early twentieth century, crop prices improve a bit. It limps along until the Depression, and that's what I think the moment you're getting.

00:22:19 Andrew Keen: Yeah. Yeah. I wanna talk about depression in a minute. How did so I take your point on the consolidation of land, the fact that this the small farm owning ideal of American democracy changes. But what about changes in urban homeownership? Did does that exist in parallel? In other words, as the small farmer ideal declines, do you see a rise of urban ownership and then, of course, the beginning of the suburbs?

00:22:51 Joshua Specht: I mean, yes. It's a you know, I didn't focus on that this much in the book because it's gradual. It's almost like, there's a process that's happening of, kind of early forms of mortgages, that are structured very differently than the ones we have today in the United States. Certain forms of ownership, poor, workers and things are buying homes, trying to. There are many of our crowded into small apartments. But for instance, the theme in the book, The Jungle, about packing in Chicago is the is they're trying to buy—

00:23:21 Andrew Keen: Enormously influential, and I know your previous book is on Red Meat Republic, so you're all too familiar with that subject.

00:23:30 Joshua Specht: But yeah. So it is it's taking off, but it's happening a little bit below the radar. You know? And it kinda the Depression's always starting to think about. But to stay on this moment, the way I think about it is that the— around 1900, the US is totally different than it was fifty years before, but they're thinking about it through outdated tools. And so I'm curious how the tools are trying to be adapted to this when they don't work anymore. And my fear is that maybe today we're thinking with outdated tools, but that's maybe for later in the conversation.

00:24:03 Andrew Keen: So let's get to then the Great Depression. We did a show recently on FDR with another historian, William Hitchcock. Yep. And we talked about FDR's remarkable ability to build broad coalitions. What was the impact of the Great Depression on homeownership? Did it decimate it in the way most people would assume, both, in agricultural, in the countryside, and in the city?

00:24:31 Joshua Specht: Yeah. I would I mean, the way to think about it is, you know, I use that moment to think about this vision of, the kind of small farmer, what I call landed democracy in the book. That's the end. So massive collapse of farming. You know? The story, if people are familiar with The Grapes of Wrath, about families losing their home.

00:24:48 Andrew Keen: Yeah. The Steinbeck is, of course, one of the great chroniclers both of this rural decay and then the crisis.

00:24:54 Joshua Specht: And that story is very real. And the story of those people going to California, lots of families in California I tell a story of a similar family from Oklahoma traveling to Oklahoma, Texas to California. So that's real. Similarly, you get stories, in towns, cities all around the country of, mortgage defaults. Right? People falling behind their pits. So there's a farm crisis, and there's a mortgage crisis of single-family homes. Now in terms of the scale of the single-family home thing is still smaller because we haven't had massive urbanization yet, but these are both massive problems. And you get stories like during the Depression, families gathering at churches in, say, Queens or something, all praying each night to end this foreclosure crisis. So, it's a catastrophe. Now I think this ties to later conversations about foreclosure. Any foreclosure crisis, the number of homes that are actually being foreclosed and people are losing is can be relatively small. I can't remember off the top of my head the exact numbers of the Depression. I mean, it was higher than any other time till, you know, in the twentieth century. But everybody is feeling it because there's a far larger number of people who are barely scraping by, and then yet another five people who are falling behind on their payments but are kind of able to stay afloat. Not to mention all the banks are starting to sag because they're weighted down by all these bad mortgages. So, you know, something affects a meaningful minority, not a majority of people, but a mean minority can kind of weigh everything down, and the whole system is starting to buckle. That's where we're left with the Depression into the New Deal in World War Two where they start to cut.

00:26:26 Andrew Keen: Yeah. And we've talked quite a lot about FDR's ability to build these supermajorities. In fact, we did a show with Adam Jentleson, a current Democratic operative who has a new book out Supermajority: How Democrats Can Build Lasting Power, rebuild the FDR style supermajority. Was the New Deal one of the reasons why FDR succeeded in building a supermajority from the New Deal? Was it because it appealed in real estate terms, in terms of property ownership? Did it attract perhaps traditional Republicans?

00:27:07 Joshua Specht: I'm gonna then I mean, I'm not a political scientist, but I'm gonna say yes based on thing is a story and kind of my read of the situation. And the reason I'm gonna think about in terms of your language is kinda what I was saying before about old tools and new problems. Hoover, before him, believed homeownership was a goal. But he was facing an unprecedented problem, and he, again, was trying to use some of these old tools. FDR, what he does, I think he succeeds electorally because of the breadth of his vision. Right? And, well, I'm about to say a bit more, but that's first key. And that is kinda like the nineteenth-century. We're like, what got these people on board for the story I was talking about, you know, ten minutes ago was the ambition that, like, we could do something big. And FDR is like, we still have that if we can recapture. Right? That's the freedom, you know, the freedom from fear. Now the other thing he did at the beginning of the New Deal is there was kind of a chaos of experimentation where they were like, we're gonna try a lot of different things, and we're desperate. Right? For instance, with the suburbanization, home building has always been a backbone of economic growth, and they thought we gotta resuscitate home building. When they find that successful, he all of a sudden ties it to a vision, the broader vision about homeownership and suburbanization. But, like, his willingness to experiment and then take the things that work and tie them to these bigger stories about what it means to be an American, I think that's where he finds success. And I think homeownership is a great example, and I could go out on him and say maybe the best example too.

00:28:35 Andrew Keen: Joshua, in the thirties and during the Second World War, of course, and then immediately after America took on, for better or worse, the mantle of the defender of the free world built itself up as the laboratory of democracy. To what extent in this period did home own homeownership and American democracy become bound up almost, inseparable in ideological terms? When people spoke about American democracy, did they think in terms of ownership? Did having a viable democracy mean owning land for everybody?

00:29:11 Joshua Specht: It did in a particular vision of the single-family home. Obviously, Americans of all stripes have always lived have long lived in apartments, apartment buildings, and cities, and the wealthiest Americans often have. But for many of these people, what it gets bound up in is not just this is the transition moment away from land, right, where, like, the first half of the book is almost about land, really, and your 160 acres to a home, a structure you occupy. I think they were kind of both with farms, but this is the key. And I think that is kind of the New Deal's, the transition hinge moment, but I do think in the aftermath of World War Two yeah. Part of, the United States was always legitimated, not just as a free society, but as a successful prosperous society. And the argument going back to FDR and kind of into the Cold War was that those things are linked. Right? That a free society with free institutions and for many political actors, free markets is a prosperous one. And so the homeownership is kind of the first sign of prosperity for Americans. Right? What is a better sign of prosperity than if we think about how this played out in early suburbs? You immigrate to the United States or maybe your parents did. You live in a multigenerational unit with in an apartment. What better signals prosperity than you go and you risk your life in Europe or the Pacific? You come back and you get married and you move away from that multigenerational ethnic enclave in the city to a new suburb where you own your own home, and you're independent of the kind of the whole past, your whole immigrant identity. Right? You're making jellos for the social in the neighborhood as opposed to, like, eating in your traditional ethnic restaurant or with what your grandmother might make you. And so it becomes the tangible expression of success and prosperity, which is not it's hard to separate from that sense of freedom. Is that sort of track?

00:31:01 Andrew Keen: Yeah. And, of course, technology is bound up with all this, not just in the technology of the new homes, the washing machines, the high-tech kitchens, but also the role of the automobile in changing the very nature of life and enabling the suburbs. When we think of the suburbs, I think we think of postwar, estates like Levittown, which were notoriously racist. We talked a little bit about race earlier in the way in which maybe the Homestead Act wasn't quite as racist as some people might think. What's your reading in the post in postwar America in terms of the subtitle of your book, The Rise and Fall of the American Homeowner when it comes to race and racial tensions in the suburbs and in places like Levittown?

00:31:54 Joshua Specht: Yeah. So I have a chapter talking about the Levittown, in outside—

00:31:58 Andrew Keen: And you might just very briefly, Joshua, explain what Levittown was.

00:32:02 Joshua Specht: Yeah. So the, kind of pioneers of the postwar suburbs, they weren't the only ones, but it was a firm called Levitt and Sons. And the earliest suburbs dating back to the twenties had actually focused on high-end homeowners. They kind of richer people who want to live outside the city and then commute in. But, basically, in the aftermath of World War Two, the United States sees an imperative the government sees an imperative to house veterans, and they see it those people have a claim. And Levitt gets in early on mass production of suburbs. They kind of turn home building into almost like an assembly line.

00:32:33 Andrew Keen: So a was it a suburb of, Philadelphia originally, Levittown?

00:32:37 Joshua Specht: The first one's in New York.

00:32:38 Andrew Keen: Okay.

00:32:39 Joshua Specht: But that one of the early ones. So there's a bunch. So there's you'll see Levittown's a lot of them in the US. But the idea is on an assembly line, right, you bring the object you're building around to the workers. On the Levitt assembly line, you move the workers to the site. So, like, all the people doing the foundation will go down the line of the neighborhood. So you can mass produce homes. Now to your story, your question, so is that enough context for Levittown? What do you think?

00:33:03 Andrew Keen: Yeah. Yeah.

00:33:03 Joshua Specht: Okay. Yeah. So, I mean, the other backstory thing we can put a pin in that you mentioned is just, yeah, the automobile is key to this. But the racial story. So once we the United States embraces that housing is gonna be allocated through a kind of regulated government-backed market of mortgages, That's I think that was a very clever idea that comes out of the New Deal. They basically established the thirty-year fixed-rate mortgage or what evolves into that. The government backstops that national system much easier to get a home loan. Okay. Few things start to happen. One, various end loan entities become very concerned about whether people will repay, and they start to try to develop abstract measures of whether a community people in a community are likely to repay. And what they pretty quickly decide, I'm oversimplifying a bit, is that racially homogeneous, primarily white neighborhoods are most likely to be good investments, good places to make loans. Older suburbs that are racially mixed. So there were a lot of white Americans who fell prey to this, in cities, but, basically, overwhelmingly, black Americans. Those neighborhoods can't don't have access to loans, first of all. So those neighborhoods start to decay. But in this new market system, any American could, in theory, buy to join a new neighborhood, white or black or any background. So what the homeowners in those neighborhoods do, they start to be afraid of these residents coming to these neighborhoods. So they start to create things known as racially restrictive covenants at first, basically a rule that you can't sell to a nonwhite buyer. Those are decided to not totally be legal. So instead, they use the violence of the mob. If the law doesn't work, well, I tell the story of a mob assembling outside the home of the first black family to move into Levittown, Pennsylvania. And they—

00:34:43 Andrew Keen: Which is really chilling, especially given the history of mob racial mob violence in the United States.

00:34:50 Joshua Specht: It's unbelievable. And I think the way to think about it is the interaction between formal modes of segregation or racial inequality, how the loans are distributed with the violence of the mob. Right? And the two kind of feed on each other for a time. And that starts to break down a bit, but because many black Americans are locked out of that initial period of creating the suburbs, they miss out on the just the creation of a lot of the prosperity around the suburbs. Right? So this creates long-term ground downstream effects for the prosperity of many non white Americans. At the same time, they stay trapped in urban neighborhoods that start to go into decline because they're overpopulated. There's not access to capital for those So this also is the story the start of what some historians have called the urban crisis, the decline of inner cities. And so—

00:35:34 Andrew Keen: so I wanna get to that crisis in a second, but subtitle of your book is The Rise and Fall of the American Homeowner. Leaving aside the issue of race, is are the glory years of the American homeowner, certainly in the twentieth century, are they the Eisenhower fifties?

00:35:53 Joshua Specht: Yes. So to give you some numbers, yeah, into the sixties. To give you a sense of numbers, basically, it's like the percentage of people in owner homes, like, the homeownership rate is around 40, and that includes 10 before the Depression set. After the New Deal, it gets up into the sixties and kind of has been in the sixties ever since. It peaks right before the 2008 crisis, but, like so think about that. Right? The homeownership rate goes up, like, almost 20 percent. A little bit less. But so massive. The prosperity is there. And so but also the idea of the homeowner as a category. Because one thing I do that's kinda sneaky in the book with apologies to anybody who goes and look for it. Right? Is the first half of the story, they're not really thinking in terms of homeowners as a category. Right? It's like about farms. But this period is where, like, you know, that story of farms is done. It's the homeowner. That's the political unit. It's like this idea, this is the rise of the homeowner as, a prosperous category of Americans, a, the value of your home becomes your most important part of your thing, and then sort of the American identity idea of who matters in the nation becoming that suburban resident who owns their own home and the nuclear family. So, yeah, this—

00:37:06 Andrew Keen: is a lot In the sixties then, of course, the sixties was in many ways, a reaction to the prosperity and the suburban prosperity of postwar America. Was there a progressive reaction to the idea, the promise of the American homeowner? Did young people reject, begin to reject the idea of owning homes? Or I've never read much about, how people's idea of property ownership changed in the sixties.

00:37:43 Joshua Specht: Yeah. I sort of skip over the sixties in the book as far as a dedicated chapter. I think, you know, when we think of, like, the sixties, the counterculture, etcetera, you know, that's kind of getting into the late sixties often. So by then, I would say, yeah. I think a way I think about it, though, is at the same time all this is taking off, we get the emergence of suburban anxieties about, like, the suburbs as deadening, as the same. So the first key to that is whether people think that or not, Americans are buying into it, and they're loving it, the vast majority. I also think as those critiques emerge and they do start in the sixties, right, with fears of conformity, for instance. The fears of conformity are inseparable from ideas about what the suburbs look like. They're also inseparable from what the workplace might look like. But that whole individualistic mindset that some people have dated to the, you know, the sixties as a cultural movement, that's key. But I think of it as, like, the emergence of suburban anxieties is evidence of the total triumph of the homeowner vision because it becomes the unexamined it becomes like the background assumption of American life. We reject it, but it's also kind of inevitable. So, like, you know, a lot of that generation's the sixties, they're ending up back in this a lot of the boomer generations ending up back in the suburbs like my parents. You know? So there's kind of a sense in which, like, there's a cultural anxiety, but it also is like we're working out what the baseline is. And that's how I start to feel about kind of trying the suburbs. But, you know, that critique is gonna gain some steam.

00:39:08 Andrew Keen: What about the economics of all this? We know that there was a great recession and then an enormous, crisis economic crisis caused by housing, in the late 2000s, in 2008, 2009. But to what extent was the mortgage industry or the economics of the mortgage, solid for most of the postwar age?

00:39:37 Joshua Specht: I think it I mean, I believe it was. I think that the problem with the run up to 2008 is, it was kinda like boiling a frog in terms of the deregulation. So to back up, the underlying assumption in terms of how mortgage finance worked was that liquidity is a good thing. Banks having money to loan to people is a good thing for the country because as they can make more loans, more people are put in homes. So that's the fundamental assumption, and a lot of the innovation in mortgage finance is based on that. So first, government sponsored enterprises. People have heard of, like, Fannie Mae, Freddie Mac. The whole logic of that is that banks make the loans. These enterprises which are backstopped buy those loans. They kind of deal with the risk by spreading it around, and then banks can go back and make more loans. So liquidity, homeownership, good thing. Then we get innovation starting in the seventies, like, mortgage securitization. This is relevant to 2008. Basically, mortgage-backed securities, I can invest in a pool of mortgages, and I have a right to a little bit of the repayment. So it almost becomes like an investment. Well, what that does is allows more money to flow into mortgages. More mortgages can be made. This is great first. Now allowing all this mortgage access maybe is raising prices and also people are buying multiple homes. But then there's all sorts of innovations leading up to 2008 in terms of tranching, chopping up those big pools of mortgages and securities, all sorts of other things. The assumption was liquidity. The problem is that the loan standards start to drop. Because all of a sudden, the people putting in the money and the people who are being careful about the loans get disconnected. And so the banks start to not care about the quality of the loans, and that's where the whole thing starts to blow up.

00:41:22 Andrew Keen: So it's part of them, and we've done many shows on this. And there's general consensus, I guess, particularly from historians and thinkers on the left that the deregulation of the Reagan and post Reagan age ultimately was flawed. You're suggesting that the deregulated nature of the mortgage industry in which financialization enabled bankers to make huge profits ultimately led to the 2008 crisis, which, of course, was caused mostly, at least initially, by housing.

00:42:04 Joshua Specht: Yeah. But you could take it you could there's a slightly different spin you could put on it too, to get the fuller perspective, which is that you could argue yes. I endorse that view. But you could argue that the real mistake was the reaction to the crisis. Right? That actually, yes, this whole process created this risk, but that risk was worth the benefits, like the economic growth and the possibilities. And perhaps the problem wasn't that. It was that the reaction to the crisis was a bailout of the banks, no consequences for litigation fraud, and then no help for the American homeowner. And that, I think, problem was generative of completely revolutionized our politics where people on the right and left lost faith. But you could say, maybe deregulation was great. I don't know if I totally buy this for you. The problem was just they needed to be more proactive once the problem happens. Like, if you're gonna let people have a party, you gotta do a better job of having consequences helping people clean up. Those things, I think, are not in tension necessarily. So I think some of the fundamental assumptions of access to mortgage finance are actually pretty good, as long as you have consequences for when it blows up.

00:43:07 Andrew Keen: My understanding, much of it anecdotal about this fall of the American homeowner in the 2008 crisis, was the fall was of those on the lower rungs, those who were taken advantage of by these too good to be true mortgages, which, of course, were too good to be true. Is that fair? In the crisis of the late 2000s, 2008, 2009, 2010, which led to so many mortgage foreclosures and people losing their homes. Was it mostly people on the lower rungs rather than people who had owned their homes for many years, more prosperous Americans?

00:43:50 Joshua Specht: Well, it's not totally. I wouldn't say that as totally fair, totally accurate, but I think it's mostly I mean, people have owned their own homes for a long time. They are relatively insulated because they may not have much mortgage debt. But you the thing about 2008 that I think is key is that everybody got pulled into this. The one thing that's the potential risk kind of politically, socially, culturally about the market based system of housing we have is that you have to buy your home. So if you're moving in the run up to 2008, you might believe prices to be completely insane. But you don't have a choice. You have to move. You have to buy a home. So a lot of what the in the book I try to do is see how people quite reasonably got pulled in. Maybe they didn't always make the perfect decision, but, like, you kind of had to participate in the madness if you were forced to. So there were some people who were lucky and some people could ride the storm better, but kind of everybody got pulled in to that extent. And I also think there's a view that what led to 2008 was extending lending to minority buyers, lowering, standards for mortgage lending. That certainly happened in the run up, but I don't think that's what caused the crisis. Right? I think there was there that was an a pretty good goal. The problem was also allowing investment. The problem was allowing certain people to engage in fraud without consequence on the part of both lenders and borrowers. So it's kinda like that's, like, half the story, but it's kinda told us the full story to justify certain kinds of things today. So that's kind of how I think about it.

00:45:19 Andrew Keen: I know your history ends in 2009, 2010 with the housing bubble, but, of course, we began our conversation with the current insanity of the San Francisco housing price market. What's happened since then, in the fifteen years since that crisis? Your book is on The Rise and Fall of the American Homeowner. Might if you wanted to be a little bit more optimistic, might it be the rise and fall and then rise again of the American homeowner, or is there's nothing much changed in the last fifteen years?

00:45:57 Joshua Specht: Yeah. I think the longer, clunkier title would not be that one. That is more optimistic than I am. I think it's kind of the rise and fall and limping along of the wounded American homeownership model. You know, the way I think about today so the book does try to talk a little at the very end, just a little bit. So you're right, basically. But at the very end, it tries to think through a little bit of the stuff today and what I how I might think about the issues. I think of today as we're back to, like, outdated tools, new situation. Or remember how I said in the first half of the book that the, like, farmer model was kind of limping along until Yeah. I think we might be limping along with this model. So who knows what's gonna come next? But I think what's become clear to me since 2008 into today is the affordability problem has gotten worse. So all the dynamics I talk about in the book in the second half of supply being constrained, homeowner politics, leading to opposition to, say, taxes, and in tension with social programs as people embrace homeowner associations, all those things are true today. I know we didn't have time for that. But I also think there's been a loss in of faith in the possibilities of our politics because of the reaction in 2008. So people on the right in the Tea Party, right, they I don't really ascribe this view, but they believe that, like, undeserving people cause the problem and they and that the takers essentially benefited against the makers. So they didn't think the state was doing the right thing. And then the Occupy Wall Street brand of politics also kinda thought, well, when the chips were down, we saw a bailout for the bankers and nothing for the American homeowner. Right? So the politics of homeownership have left us disillusioned with our politics. The storage of those names left us disillusioned. So I see us as, like, trying to grasp towards what's gonna come next when it's clear that this kind of government-backed market vision of the home is facing real problems. I don't have a solution about what to come next. I have a few ideas, but I think that's where we're at. It's kind of limping along. And to what extent is for real problem, for younger people.

00:47:59 Andrew Keen: So I take your point. It's limping along. To what extent is it a generational crisis? Here we go. Every week, there seems to be a new piece about, Gen Zers trying to build their wealth in the stock market rather than the housing market. Buying a home has got harder for young adults in most US metro areas. But on the other hand, over the last five years, American homeowners' valuation has risen $34 trillion, so it's still the most substantial. But we did a show with, another historian, Samuel Moyn, who— well, from Yale, who has a book, Gerontocracy in America: How the Old Are Hoarding Power and Wealth—and What to Do About It. Is this hoarding of power and particularly wealth, is it mostly concentrated in real estate? And, ultimately, will the crisis manifest itself in generational terms? I mean, these people and there have been lots of books and articles about this. These old people will eventually die and presumably pass on their real estate to their kids and their grandkids.

00:49:08 Joshua Specht: Yeah. Yeah. So that's a that's an interesting point. I mean, you would have to ask Sam for how he thinks about it. But what I would say to your point is, yes, there's a generational tension. And it's true. I mean, no one lives forever. That will manifest itself in new forms of housing.

00:49:22 Andrew Keen: So out here in Silicon Valley, Peter Thiel, I think, will live forever, but you have to have a lot of money to live forever these days, George [as spoken: Joshua].

00:49:31 Joshua Specht: That's true. Good point. Maybe that'll trickle down to me eventually or us. But, I think that okay. So if we start with the fundamental assumption in my book, that the legitimacy of the American project is predicated on the of the widespread ability of people to own land or a home. That's kind of the key. Then the generational divide now or what becomes the divide between those that inherit homes and those that don't is fundamentally corrosive to our politics, whether it's there's prosperity you can measure or not. And so if these Gen Z people if Gen Z, Gen Zers or millennials who can't afford their own home or whoever, that problem becomes worse. It doesn't really matter what the numbers are to my mind because they're gonna vote for a politics that doesn't that gives up on the system as is. Now maybe you think that's a good thing, but that's kinda my point. Is however we constructed the dynamic you just identified is gonna be a real political problem and it's and that is a social one. So, yes, you could argue there's a generational inequality that I think will probably in the next thirty years transform into a kind of class exacerbating existing class inequality. However we think about that though, we need a democratized vision of homeownership, widespread, or else I think the American project is seriously in question. That's the kind of conclusion of the book.

00:50:50 Andrew Keen: Finally, there have been lots of books from the left about the crisis. The Klein–Thompson book, Abundance, has done very well. We had Mark Dunkelman on the show last year. His book, Why Nothing Works, is also influential. Yep. These progressive critics of the current American situation, argue that one of the reasons why we have a housing crisis is there aren't enough houses, and that's because of overregulation. And the way to solve it is deregulation, enable innovation, new ways of building houses and doing away with local regulations that stop housing the NIMBY crowd. Is there some truth to that in your understanding? And what can we learn from history about too much or not enough regulation when it comes to homeownership?

00:51:44 Joshua Specht: My conclusion is that it's good but not enough, for two reasons. One, a policy is not a politics. And so it's kinda like their point. I agree with a lot of the ideas, but they're politically very difficult. So understanding why they're so politically difficult would help us get there. I do think this that those issues are real. I think about it more as you're gonna need to pair that with a more positive vision of what housing could and should be. And looking at American history to give some specificity that what I think about is in the short look. Bad news for maybe you and many of your listeners. Places like San Francisco are gonna face high housing prices almost no matter what. We can mitigate them. People wanna live there. That's where the action is. New York. Right?

00:52:30 Andrew Keen: But it's mostly not bad news for—

00:52:33 Joshua Specht: Yeah.

00:52:33 Andrew Keen: Okay. People like myself and people living here because we all own our homes. Okay. Good. Bad news for anyone else who wants to live here.

00:52:39 Joshua Specht: Good news. But, you know, for everywhere else, I think that the way is to think like a nineteenth-century American, which is to say, in the nineteenth-century, every town you were moving to could be the next Chicago or, you know, today, San Francisco. I think we need to think about a policy, and I think this could be popular across the political spectrum because of where these places are, that builds up the country's second and third tier cities as part of a, like, broader kind of industrial—

00:53:03 Andrew Keen: So South Bend where you're talking from.

00:53:05 Joshua Specht: Yeah. Just shovel money to be in South Bend here. No. But I do think that will take off the pressure. Decentralization, I think, is a viable antidote in addition to all these measures, these kind of abundance views that I do endorse. But I think thinking about that and, like, just thinking bigger than just cutting back to these things, I think we'll do a bit more. But what you know? That's—

00:53:25 Andrew Keen: That's a story headline, Joshua, for this show. Think like a nineteenth-century American, which coming from a historian like yourself is probably not that surprising. The book is out. Property Values: The Rise and Fall of the American Homeowner, one of the key issues, of course, in America. I'm assuming, particularly a candidate in 2028 will begin to make the issue of property value central to their campaign. I hope so. Maybe the Republicans as well. But thank you for a really interesting enlightening conversation on property values historically and currently in the United States. Thank you so much.

00:54:04 Joshua Specht: Thanks, Andrew. It was a great time.