Heart & Home is a monthly column by Deputy Director of Strategy, Josh Ishimatsu
There’s a lot of heat around the price of oil (and around rising prices more generally). But the high price of housing is more important than the high price of oil. In these times when we are all being squeezed, housing affordability should be our collective #1 issue. And building a collective sense of home is the ultimate way out of our current crisis.
One thing can be two things at once. The price of oil is like that. It is two things at once. Two contradictory things that it doesn’t make sense for it to be at once.
On one hand, the price of oil is super important. It is a metaphor for everything that is wrong with our world right now. It is a turning point, a fulcrum for our messed up politics. It is a petard upon which the current president could hang himself.
At the same time, the price of oil is not that important. It is only one thing in a basket of things. It is only a small thing in the scope of all our costs. In the thingness of our lives, it is not as important of a cost as housing. In the non-thingness of our lives, it is not as important as a home.
The price of oil is important
The price of oil is in the fabric of our clothes. It is in fertilizer that grows our food on corporate farms. It is in our commutes. It is in our pollution. It is literally and figuratively what makes our world go.
Usually, I think it is stupid to blame a president for the price of oil. Usually, I think the price of oil is about geopolitical events that are beyond the control of any one person, no matter how powerful they are.
But the current spike in the price of oil is from an unnecessary and ill conceived war that almost nobody else in the world wanted. The current attention to the price of oil is a crisis of the current president’s own (un)making. It can be what finally pierces him, to finally and truly reveal that the (wannabe) emperor has no clothes.
The price of oil is not that important
Housing is more important than the price of oil. And, even more importantly, home is a central metaphor that can get us out of these dark times.
Way back when the price of eggs was spiking (remember that time, so long ago?), I wrote a column saying that the price of housing is more important than the price of eggs. The price of oil is a bigger deal than the price of eggs. BUT the price of oil is still not as important as the price of housing. In purely material terms, the median household pays something like 3% of their annual income on direct fuel costs (gas for transport, heating oil, etc.) and another 2-3% on embedded fuel costs (transportation costs for all goods and material inputs derived from petroleum (plastics, fertilizers, clothes, etc.)). So, the price of oil accounts for something like 6% of a median family’s expenses. In comparison, the price of housing is over 30% of a median family’s expenses – over 5X the financial impact on a typical household.
And yet, it feels like people get more worked up over changes in the price of gas than the price of housing. Behavioral economists would say that this is because costs we engage on a daily basis (even though we fill-up gas less often than everyday, we see and pay attention to gas prices whenever we drive around) trigger what they call System 1 thinking – which is faster, more intuitive, more driven by emotions, more driven by assumptions and simple mental models (what the literature calls heuristics). Versus costs that happen more on a monthly basis or longer time horizon which trigger System 2 thinking – more rational/analytical, more likely to involve research/comparison shopping. For most people, housing is a System 2 transaction – you think about where you want to live, you look at a few different places, you lock in costs for a year (or more, if you’re buying). So, housing engages different parts of most people’s brains. It typically triggers less immediate, less pressing emotional responses. It therefore generates proportionately less political heat than gas prices. And yet, as described above, it is objectively and materially more important than the price of oil – housing is the single biggest expense of the typical American family. If we were more inherently rational, we’d be paying more attention to housing than oil.
In addition to the psychology and econometrics of oil prices vs. housing prices, I believe there are social justice/social transformation reasons why we should be paying more attention to housing prices than oil prices.
To get to a better world we don’t want to fix the price of oil, we want to break our oil dependency. We want to kick our addiction. I don’t want us to fixate on oil prices because this is not really the problem we should be fixing.
Oil should be fungible. We should be trading oil dependency for electric cars, for biking, for walking, for living closer to work, for organic fertilizers, for more sustainable food systems. We should be trading oil dependency for a vision of a more humane and sustainable world. We should be trying harder to do without oil.
Housing is something we can NOT do without. Everybody needs a roof over their heads. And even more importantly, a sense of Home is not a fungible commodity. Security, belonging, ownership, a sense of place, a sense of home – these are things that everybody deserves. A shared sense of home is the foundation of community. Communities are the building blocks for a better world.
So what?
In this historic moment, when so much attention is being focused on issues of affordability, we have to assure that housing is front and center in the general emotional/political momentum around rising prices. I believe this is important because it is how we can transmute the current vibes into more substantive and positive social change. Housing affordability is a cause we can rally around. Home is a vision of a better world.