The Costs of Making Houses into Commodities

Last year my wife and I traveled to my step-daughter’s graduation from Lehigh University. The campus is beautiful with old trees, stone buildings, and a view overlooking Bethlehem, PA. While trying to navigate the narrow city streets, which were heavily trafficked due to the influx of thousands of families, I noticed the letter ‘A’ on many of the houses, including my step-daughter’s apartment. She told me that the ‘A’ is a logo for Amicus Properties, which I discovered is an investment firm specializing in college housing. In May of 2024, the firm invested $32 million in the Bethlehem area. I can report that the apartment was significantly better than the apartment I rented during my senior year of college. What this really highlighted for me was the trend happening around the country as all forms of housing are being enveloped into investment portfolios.

It should come as no surprise to anyone paying attention to real estate that corporations are buying up large shares of housing all over America. According to a report published by the Lincoln Institute of Land Policy, since 2000 the percentage of total home sales purchased by investors has grown from nearly 7% to 17%. No doubt many readers probably have money invested in REITs or real estate investment trusts as they have come to be integral within retirement portfolios. The 2008 crash and the Pandemic were two key events that shifted investments into housing. Globalization, the growth of platforms like Airbnb and VRBO, and a lot of surplus wealth has led many to turn to real estate as a way to diversify. The financialization of housing has done more than update college-town apartments and open up new investment opportunities; it is influencing more and more Americans to see their houses not as homes but as commodities.

Camp

My family owns a cottage in the Thousand Islands that my grandfather and father built back in the 1950s. It is a small one-room house with a fireplace, little kitchen, and living area. The bathroom was added in 1963, and there is a shed-sized “little cabin” that my dad and grandfather stayed in while they built the main cabin. For 70 years, my family has used this getaway for fishing, boating, relaxation, family get-togethers, and, most recently, the after-party for my niece’s wedding. Changing anything at Camp, as we call it, requires a lot of discussion and agreement. Last year we bought a new pull-out coach, but it took almost two years from the first idea to the actual purchase because we had to deliberate and get used to the idea. This is how it has always been. Camp is our family shrine. My grandparents, father, and aunt are even buried in the local cemetery.

It has always been our way to do whatever work was necessary ourselves. Partly out of financial limitation and partly out of pride, we have fixed and replaced walls, docks, decks, and windows. We only hire professionals when we reach our limit, like the time when my father hired a lumber jack to take down a giant white pine with a huge branch hanging over the little cabin. Spending time at Camp means a mix of work and leisure, and there is always work to be done; whether it is fixing something on the boat, a plumbing job, a problem with the pump, or dealing with vermin—Camp can be like a needy relative. The big jobs are always done as a team too. My older brother takes on the role of foreman and the rest of us fall in line as he organizes work weekends for whomever can make it. In this way Camp keeps bringing us together.

Camp is located in the middle of Wellesley Island, which has had a rich and interesting history. Early on, it was the playground of the wealthy from New York City, many of whom would come for the summer and enjoy the beauty and richness of the islands. Everyone who knows anything about the Thousand Islands has seen Boldt Castle. George Boldt was indicative of the age, where wealthy business people sought respite from the big cities by spending summers along the river. While Boldt Castle is spectacular, my favorite place to visit is Singer Castle on Dark Island, where an executive from the Singer Sewing Machine Company had a medieval castle built back in 1905. While many of these mansions are still standing, this era of high society summering in the Thousand Islands came to an end in the 1920s and 1930s.

With the completion of the iconic Thousand Islands Bridge system in 1937 and the development of new highways, accessibility meant that the middle classes could enjoy this beautiful place. About one third of Wellesley Island is owned by the New York State Park system, providing a place for people to camp, swim, fish and enjoy hiking. Additionally, small cottages like ours popped up all over the river edge as the post-war prosperity spread. The 1980s featured a new boom era as the decadence of the age came to the region. This was the decade of my youth, and I recall a lot of sports cars and speed boats thundering up and down the river. The good times seemed to spread as a rodeo and bungee tower came too, but they didn’t last long. This age passed, maybe because so many New Yorkers began to move south, maybe from economic malaise or because people could travel more affordably to the Caribbean or take a cruise.

Over the last ten years a new era of wealth has invested in the region from well-paid professionals buying vacation homes, retirees seeking a paradise, and real-estate investors seeking profits. There is an enduring beauty of the Thousand Islands, which continues to attract people. However, these newcomers are more demanding about conveniences, and they have more money than the post-WWII folks. These new consumers are not interested in sacrificing anything. Like the titans of a century ago, they have the means to make their own paradise. Old cottages are demolished or totally renovated, and new colossal structures blot islands and shorelines. These modern houses have updated appliances, Wi-Fi, big screen televisions, surveillance cameras, and “smart” lighting. They feature giant windows facing the river and sleek decks of composite material, and they all look alike with a few dull colors: grays, off white, tan, or beige. Large boat houses with matching color and trim accompany them along with huge two-car garages and elaborate docks. Many of them are so big, that they occupy entire lots, making parts of the river front more like dense city blocks.

The new and modern cottage is made to sell and add value to one’s retirement portfolio. They check the boxes for market demands. Buyers are comforted knowing that each year the property is increasing in value, and renting it out is always on option. The point is that the new cottage of this age lands more in the category of a commodity than a vacation home. This leads to a paradox of sorts. The Thousand Islands are defined by the white pines which have strange, wind-bent trunks and asymmetrical branches that poke out above tree lines or hang sideways over the shoreline. Then there are the rock outcroppings found all over the islands with the distinct pinkish granite that is even used in the roads. The iconic structures make their mark too with the two main bridges and Boldt Castle looming off in the distance. The entire area is one long international archipelago with little islands everywhere waiting to be explored and a shipping lane featuring giant freighters every few hours. It has great fishing, boating, birding, water sports, cool boats, light houses, old military forts, great restaurants, museums, and golf courses. It is a remarkable place worthy of all the attention. However, my suspicion is that a focus on square footage, lot size, master suites, and sleek new kitchens will not enhance the enchantment of this special place. A singular focus on the market value of a thing reduces it into something lacking any substance.

Faust

This takes me back nearly 200 years to a famous play that speaks to our age very well. Goethe’s Faust offers an example of how modernity and tradition come in conflict over space. In Faust’s last great scheme, he took over a seaside fief and began to modernize it with canals, a port, and various commercial endeavors. However, his vision was frustrated by Philemon and Baucis, an old couple with a humble home that included a chapel and a random forest of linden trees. Zeus blessed them because they were hospitable and welcomed him into their home when others around had refused him. Philemon and Baucis represent the enchantment of the pre-modern world when a thing could be more than the sum of its parts. Faust only saw their land as a blot on his vision, so he ordered Philomon and Baucis to be moved, but his goons burned everything and killed them.

This story demonstrates the blindness of a modernity that cannot see beyond quantifiable items to be used as instruments for one’s own ends. A house is cut up into various items to be used in marketing. Curb appeal, square footage, lot size, number of bedrooms and bathrooms, waterfront, and the school district are easy items to tally and, thus, become the driving forces behind property value. All decisions about a development or house have to be filtered through the profit lens. It also leads people to resist new development in their neighborhoods due to the risk it may pose to housing values. The mindset of house owners becomes more like those of business owners thinking about efficiencies and new angles to enhance future profits. One buys and sells a house as easily as other investments like stocks and bonds. What cannot be measured has little economic value, and, therefore, thinking this way makes one blind to the deeper value that a physical space can have. Philemon and Baucis show us what a home can be when we look at it apart from its market value.

Over the years our Camp has become more than the sum of its parts. It includes many items that have great sentimental value by the role they play in our collective memories. There are the Remington reprints still hanging from when my grandfather put them up, English caricature mugs on the fireplace, or collector plates on the wall that my dad gave my grandmother for her birthday every year. None of these items are particularly valuable in the economic sense, but no one dares touch them for they are items that add to the sanctity of our family shrine. These objects allow us to gain access to feelings, memories, and representations of our family values which are difficult to access otherwise. My dad passed away three years ago, but I feel his presence when I look at his deer mount or when I wake up in the morning and have coffee on the deck that we built together with my brothers.

Conversely, my mother and step-father bemoan the loss of their cherished farm. We didn’t really run a farm, but The Farm was on an 11-acre parcel with two old barns. My parents bought the old run-down house back in 1988, and it was their idea to bring our two families together. We all worked hard on that house and had all kinds of adventures in the process. My step-father took on one task after another, sometimes his brother would help and sometimes it was just me, my brothers, and step-brother. It was during these jobs that I really bonded with him and even came to enjoy the work. My parents loved The Farm, but it grew and grew such that they could no longer take care of it. They sold the farm about 5 years ago and have since purchased three different houses. They long for a home to return to. My mother keeps packing her things because she thinks they are going home soon.

Disenchantment

Max Weber famously wrote about how modernity led to the “disenchantment” of the West. What he meant was that modernity came with science, utility, efficiency, and quantification which negated God, animation, myth, and the overall mysteries of life. Now we think we know so much because science has provided us with so many explanations. All can be defined, grouped, and categorized neatly. When we define Camp in this way, it becomes a 70-year-old, 1000-square-foot structure, with old wiring and outdated plumbing. Psychiatrists can even explain my fascination with Camp in pseudo-scientific terms too. Perhaps my childhood was stalled by unresolved feelings about my father, other unfulfilled deeper human needs, and maybe some kind of manifestation of repressed feelings. All of it measured, quantified and analyzed so that is can be explained. But these explanations fall short of reality in the same way that a house’s commodity value falls short of its value as a family’s home.

Americans have sacrificed meaningful homes and strong communities for market pressures. Developer Coby Lefkowitz outlines the financial picture of modern-day real estate development. He explains how the incentive system works. Large developments are more profitable, but only large firms can cover the upfront costs of these projects resulting in fewer and fewer entities building new homes across America. Similarly, larger, pricier houses offer a better return on investment because of the cost structures involved in building homes. When certain costs are incurred regardless of how big a home is, margins are better for more expensive homes. Efficiencies of building, local building codes and homeowners wary of the impact on the value of their house/investment also create apprehension and NIMBYism for anything different. What comes of these new developments are often suburban deserts. Walk through the modern suburb on summer evenings and, more often than not, discover how quiet they are. There are no children playing, and blue lights flicker through large living room windows. Fewer people talk to their neighbors, still fewer even know their neighbors, and the bonds necessary to have communities are eroding. It is as much the result of modern lifestyles as it is the result of the way houses are being developed, marketed, and commodified.

My family is very fortunate to have Camp. We have what others desire but cannot attain through a simple financial transaction. Camp is enchanted because of our family history, its beauty, and what it does for our family. My grandfather never envisioned a shrine for his descendants when he built it; he just wanted a get-away where he could fish and relax. Camp represents a true investment, which is why it is priceless for our family. For us, it took a shared effort, shared experiences, and a shared place that everyone could enjoy over a long period of time. Camp is also set in a beautiful place resting above the water overlooking the river. There is no recipe that creates such a place, but I suspect that it takes a long time and requires some type of cost or sacrifice. Philemon and Baucus were generous hosts, and my family has sacrificed a lot of time and effort working together to build a place that can bring people together in meaningful ways.