Mr. Retsinas, a former federal housing commissioner, wrote this commentary especially for National Mortgage News.


Dictionaries are not static. Some words go unused for so long that lexicographers dub them "archaic." Definitions also gravitate to that catch-bin. The plummeting housing market has forced a re-evaluation, not just of the financial value of a "home," but of its meaning. Once just a place for a family to live and take root, the home in recent times has been elevated to Investment Opportunity, a place where you stayed for awhile, made a lot of money, then moved on to the next investment opportunity.

Is the definition of home about to change once again?

When immigrants crowded into this country, they yearned for shelter, a sanctuary in a new land. That shelter could be a tenement, a farmstead, a ramshackle cottage. For families, "home" had a connotation of safety and stability.

Banks did not lend with 30-year amortizing mortgages, but with five-year loans, and a balloon payment at the term's end. A family needed to amass a 50% down payment. Few Americans could. So "homeownership" was neither a plausible individual aspiration nor a policy prescription. The word "home" had no investment connotations.

The ultra-rich owned mansions; but "home" does not describe those sumptuous resting places on peripatetic journeys: people summered in Newport, wintered in Manhattan, or toured Europe, moor-less, for years. If you had asked an Edith Wharton matron where "home" was, she would have asked what you meant.

Home as Anchor

When the federal government introduced long-term mortgages, people could buy their domiciles. The definition of "home" shifted. A home became an anchor, a stake in the community. Veterans from World War II seized upon the FHA and VA mortgages to sink roots into the middle class; one hallmark of middle-class success was to own a home. The "Levittowns" and their ilk sprang up. For a machinist at an automobile plant, the American Dream was to own a three-bedroom expandable Cape.

The anchor was construed as just that -- an anchor. The home was more a place to live than the linchpin of an investment strategy. Economists praised homeownership as "forced savings:" people might eventually pay off their 30-year fixed-rate mortgages, celebrating, with neighbors, at "mortgage-burning" parties.

Owners hoped to be upwardly mobile, to get promotions, to find higher-paying jobs. But the house itself was not the catalyst for the increase in wealth. People did move -- the "starter" house (a term now listed as "archaic") came first. After a new child, or a promotion, some fortunate families moved to larger homes, often in better neighborhoods. Others expanded a dormer, or converted a breezeway. But most homeowning families stayed put, expecting to age in their homes.

That experience was not unique to America. In most of the world, "homeownership" still carries that expectation of rootedness. "Home" also represented an asset -- but an asset that was illiquid, and was not expected to reap mega-returns. Indeed, many homeowners, coping with repairs, renovations and taxes, saw their homes as "money-pits."

Home as Investment

Over the past decade, "home" became an exciting investment -- more a place to buy and sell than to live in. If the movie "The Graduate" were updated, Benjamin would have heard "housing" not "plastics." Americans who lacked the prescience to pick a Google or Amazon could buy a house -- thereby netting double-digit returns on their investment. People who bought homes expected to sell them at a huge profit. Some owners converted their homes into ATM machines, borrowing against ever-rising equity.

Mortgage products evolved to let everybody, even people with shaky credit and no savings, sign on the dotted line. Some people made their living by buying and selling homes. "Flipper" entered the lexicon.

Home might or might not be where the heart is -- but home was clearly where the money was.

This past year, though, the financial "value" of housing has fallen. Today the center hall colonial is no longer an ATM machine -- an owner's equity may have disappeared with the plummeting market. Foreclosures are up. "Flipper" once again means a whale. The hedge funds, banks, and investment empires are scurrying to explain and document their losses. Almost one in five homes purchased in the past two years has negative equity.

Soon the dictionary, under "home," may shelve "investment" as archaic, reflecting a period of inflated values, easy credit, and wild expectations of profit. The "standard usage" definition will hark back to the older one: an anchor in a community where a family can live, work and play.

Future generations may wonder why Americans for a brief stint redefined "home" into an ultra-profitable financial investment. That frenzy made many people wealthy, but left many others adrift.