A couple of months ago a friend sent me some images from Florida. He and his family were visiting his wife’s parents who live in a comfortable retirement community. To quote: “Here’s where we’re staying for the next few weeks. Sun City Center. It’s very superficially nice. My father-in-law has had to look things up in the HOA rule book at least three times since we got here on Saturday.”
Among many of the observations that he shared with me was a conversation with neighbors who debated the relative merits of different investment strategies now that their primary earning years are over. One resident paid cash for his home and moved his other funds in to low risk securities. He thinks it’s better to absorb the “opportunity cost” of keeping money on the sidelines rather than risk losing his savings to the vicissitudes of the market. He’s too old to start all over again.
The other strategy expressed by another resident was the exact opposite. He used the smallest possible down payment to purchase his retirement home and put the bulk of his cash into the stock market to maximize income. Sure, there are ups and downs in the market, but over time everything just keeps going up. Why sit around watching your money lose value in the bank with near zero interest rates while under-reported inflation chews up your buying power?
Here’s my take on the debate: they’re both living in a place where money – most of it in virtual digital form ten steps removed from any kind of physical reality with multiple middlemen managing the complexity for them for a fee – dominates every aspect of their lives. Those financial systems are inherently fragile and vulnerable to disruption. They’re having the wrong kind of conversation.
Here’s the conversation I’d like them to have instead. The larger surroundings are barren of the things you’d really want to have on hand if either financial strategy were to fail. It’s illegal to operate a productive business in this subdivision so earning money from home is out of the question. It’s strictly prohibited to have extended family or friends live with you for more than a couple of weeks – particularly anyone who isn’t of the required age group. It’s forbidden to grow a vegetable garden or plant fruit trees on your own property in this HOA. It’s physically impossible (or highly unpleasant) to walk or ride a bike to any daily needs or critical services. The prevailing culture is one of enforced monetization of absolutely everything, but there’s exactly zero provisions for anything that might support life in the absence of little plastic cards and bits of colored paper.
We’ve arrived at this particular set of arrangements for perfectly understandable reasons. The self selecting population of this retirement community is attempting to secure their investment by outlawing the things that reduce property values and allow lower class people and activities to exist. Running a commercial enterprise is a working class arrangement that has no place in an affluent enclave like this. Hanging laundry to dry in the sun is associated with tenement slums. Growing food where a manicured lawn should be is just plain trashy. Keeping chickens and goats is for illiterate peasants. Having a dozen cars parked out front is a sign that the inhabitants need to pool scarce resources to pay the bills. All these things have been eliminated by a combination of municipal regulations and Home Owners Association rules. Complying with these restrictions keeps up appearances and maintains a very specific kind of order. But it’s expensive and non-productive by design. Consumption is mandatory.
The newest developments feature large homes with all the latest bells and whistles, but their physical design is exceptionally limited. The front yard is a little green toupee between driveways. There’s a useless strip between the homes so they are “fully detached” in spite of the collective legal nature of the HOA. The back yard is a patio up against a concrete wall. These are actually luxury apartments by other means. The inhabitants may be proud “homeowners” but the bank owns these buildings and collects rent every month in the form of mortgage payments with interest.
The majority of the American population currently lives in some version of the suburbs. This will remain true for the foreseeable future. The real question is how ever more people with increasingly limited resources under considerably more stress will occupy them – particularly as failing institutions squeeze them for revenue. This is an extraordinarily fragile and vulnerable set of living arrangements and it isn’t going to end well.