Matt Rourke/AP

The Federal Reserve raised its key short-term rate by three-quarters of a point for the third consecutive time Sept. 21. Two more rate hikes are expected this year, driving up mortgage rates and pricing homes out of reach of many middle-class Americans. Above, a home for sale in Wyndmoor, Pennsylvania, on June 22, 2022.

In recent months, Ja’Marquis Perkins has watched house prices come down to earth. As a real estate agent in Tuscaloosa, Alabama, he’s begun advising buyers to look for deals where they might once have faced bidding wars. He recently helped a first-time buyer close on a two-bedroom house for $185,000, which was below the listing price. “It’s definitely starting to slow down. Homes are going for less than what owners had asked,” he says. 

As goes Tuscaloosa, so goes the nation. 

A red-hot U.S. property market juiced by rock-bottom mortgage rates is finally cooling as the Fed raises interest rates to curb inflation. Most cities are seeing fewer sales and flat or falling house prices as higher borrowing costs bite. In July, month-on-month average sales prices fell for the first time since January 2019, according to a national home-price index.

The sharpest falls are in cities like Seattle, Boise, and Los Angeles that had seen some of the biggest run-ups in prices, says Skylar Olsen, chief economist at Zillow, an online real estate platform. Not all markets are swooning; buying has been strong in Florida, hurricane damage notwithstanding. But the overall trend is clear: House prices have peaked. 

“This is a cooldown. Sales are pulling back. Prices are pulling back. But supply is also pulling back,” says Ms. Olsen. 

What would it take to make homes affordable?

For middle-class Americans trying to buy their first home, or move up the property ladder, this pullback offers little comfort. House prices are going down but mortgage rates are way up, putting ownership, or a move, out of reach for many. By the yardstick of how much it costs households monthly to own an average house, housing remains unaffordable in most cities. And that puts a chill on the aspirations of younger Americans in particular to own homes and build wealth as their parents did. 

Take Greater Boston. In April, the median house cost around $660,000. To afford such a house would require a household income of over $180,000, according to calculations by the Joint Center for Housing Studies at Harvard University. That house might fetch less today, but higher borrowing costs would more than erase any nominal savings. Similarly, the average homebuyer in Los Angeles would need to earn $262,000 to buy the median house there.  

Even Sun Belt cities, where land is cheaper and new houses more plentiful, aren’t immune to price inflation. In the Atlanta region, the average house costs $376,000, calling for a minimum income of $103,000. In 2020, the median household income in Atlanta was $64,179. 

How far would house prices need to fall to put them within reach of more Americans? Much depends, say analysts, on the strength of the overall economy, employment, and wage growth, as well as the trajectory of interest rates. If nominal house prices keep declining and inflation-adjusted wages go up, housing eventually becomes more affordable.

SOURCE:

U.S. Census Bureau, Harvard University's Joint Center for Housing Studies

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Jacob Turcotte/Staff

Edward Pinto, a former executive at Fannie Mae, estimates that U.S. house prices could fall by 10% on average through the end of 2023. That’s still far less than the nearly 40% rise since the start of the pandemic in early 2020.

Such a modest correction in prices doesn’t bode well for aspiring homeowners, says Mr. Pinto, who directs the AEI House Center at the American Enterprise Institute, a right-leaning think tank in Washington. “The problem with affordability for first-time buyers is still going to be with us,” he says. 

Housing is considered affordable if total costs – rent or mortgage, plus taxes, insurance and utilities – are no more than 30% of gross income. While rents fell in many cities in 2020 amid pandemic shutdowns, they have since risen on the back of the buoyant real estate market and are likely to remain elevated, underpinned by demand from younger renters who have been unable to afford their first home. High rents relative to incomes are another dampener on homeownership, since it makes it harder for renters to save for a down payment. 

In Colorado, where house prices rose rapidly during the pandemic, driven in part by work-from-home movers, the Colorado Futures Center applied a benchmark of 2015 to calculate how far average home prices would need to fall to become affordable. The study found that to restore the income-to-housing ratio of 2015, before the run-up in prices, it would take a statewide decline of 32%, which it noted would cause “considerable pain” to homeowners. 

Of course, a rapid fall in house prices brings its own risks. The bursting of a debt-fueled real estate bubble in 2007 ended in a global financial crisis that wiped out billions of dollars in household wealth. Few expect a repeat this time because of tighter mortgage standards and less-leveraged lenders. Another big difference, say analysts, is no supply overhang of new and half-built houses in speculative real estate markets in states like Florida and Nevada.  

A dearth of starter homes

In fact, the opposite is true: New-home construction has failed to keep up with rising demand, particularly for modest-size homes for first-time buyers. In 2021, the financing agency Freddie Mac estimated the overall shortfall at 3.8 million units, based on a population of 126 million households. It noted that completions of starter homes of 1,400 square feet or less had fallen to 65,000 a year, compared with over 200,000 in the 1990s. 

This shift has been driven by land-use regulations, including zoning for single-family homes, along with growing neighborhood resistance to greater density. As land costs rise, developers are less likely to build entry-level houses, so demand for those that already exist pushes prices higher.

Lynne Sladky/AP/File

Real estate agent Keva Chester (right) walks with first-time homebuyers Fatima Heath (left) and Willie Hardemon (center) on April 18, 2021, in the Overtown neighborhood of Miami. During the pandemic, low mortgage rates and a pause on student loan repayment helped many millennials buy their first homes.

This squeeze is particularly acute in California, which struggles to house low-income workers. Some are living instead in cars or recreational vehicles, which has caused friction in wealthy communities. Mountain View, the Bay Area city where Google is headquartered, has banned RVs from parking on most residential streets. 

Even for affluent Californians, the price of housing is eye-watering, says Mr. Pinto. In cities like Santa Clara, where the median income is $130,000, modest houses cost over $1 million. 

It all comes back to supply and land-use restrictions. “They build very little, and they made land extraordinarily expensive and scarce and that drove the price up,” he says.  

The thorny politics of NIMBYism mostly play out locally, though state and federal policy can arm-twist localities to allow more moderately priced housing to be built. President Joe Biden has proposed giving greater incentives to communities that relax zoning laws. Some states have begun easing rules on adding extra units to existing single-family homes. 

Homebuilding has been squeezed for other reasons, too. Fed tightening weighs on homebuilders, since it pushes up borrowing costs on projects. Developers also face shortages of skilled labor and higher prices for materials like lumber and concrete. Permits for single-family home construction are down this year, a sign that developers are pulling back, says Ms. Olsen. “That’s what worries me over the long term,” she says. 

Matt Rourke/AP

Construction workers build new homes in Philadelphia on April 5, 2022. Low mortgage rates have helped juice the housing market over the past decade, easing the way for borrowers to finance ever-higher home prices. A run-up in rates is creating a slowdown in home sales this year, reducing would-be buyers’ purchasing power.

Rising rates could also crimp the supply of entry-level homes in another way, says Laurie Goodman, a fellow at the left-leaning Urban Institute and founder of its Housing Finance Policy Center. During the easy-money boom, owners of modest houses could take advantage of low mortgage rates to trade up to a larger house that had extra bedrooms for their kids. 

For a similar homeowner today who wants more space, the math doesn’t add up, since borrowing costs are so much higher on the new loan than the old one. “You may not like that [starter] house – but you love that mortgage,” says Ms. Goodman. 

Younger households that want to own

The pressure to add housing of all sizes isn’t going away. Millennials, the country’s largest demographic group, are becoming homeowners, with rates of ownership among 25-to-34-year-olds rising in recent years. Some Millennials bought their first home during the pandemic helped by record-low interest rates, while those who were college graduates also benefited from a freeze on federal student-debt repayments. 

Then there are the millions of young Americans who pay no rent or mortgage because they live with their parents. Around one in five 25-to-34-year-olds report living at home; in California, the share is nearly double, according to Mr. Pinto. 

Building more starter homes would help middle-income households to get on the property ladder. Relaxing zoning rules to allow the construction of more rental units, such as multifamily apartment blocks, would also help ease the upward pressure on rents and allow households to save for a down payment, says Alex Schwartz, a professor of public and urban policy at The New School in New York. 

But that doesn’t address a segment of the housing market that isn’t on a path to homeownership, namely those earning low wages that don’t get public housing assistance. A pandemic moratorium on evictions, and federal and state aid for rent payments was a balm for many, but those programs largely have ended. For these households, market rents for basic apartments are simply too high, even in Midwest cities like Cleveland that aren’t typically seen as unaffordable. 

“There’s a fundamental mismatch between what a renter can afford and the actual cost of operating a housing unit,” says Professor Schwartz.

Olivier Matthys/AP

U.S. Secretary of Defense Lloyd Austin (left) gestures to Ukrainian Minister of Defense Oleksii Reznikov during a meeting of NATO defense ministers at NATO headquarters in Brussels, Oct. 12, 2022.

Amicus certus in re incerta cernitur.

These wise words – best known these days through the English saying “a friend in need is a friend indeed” – were written by the Roman poet Quintus Ennius nearly 2,500 years before Vladimir Putin dramatically intensified Russian missile assaults on Ukraine this week.

But Ennius’ insight has taken on new relevance as America and Western Europe chart their response to the latest escalation in the war.

So far, Mr. Putin’s invasion has had the effect of bringing old friends back together: reviving a divided and demoralized NATO, and giving the diverse nations of Western Europe a renewed sense of common purpose.

It has reminded leaders on both sides of the Atlantic of the value of alliances, especially in times of need. It has strikingly rebalanced the arguments in a vital geopolitical debate: me first, versus we first.

Yet that debate is far from definitively resolved. Centrifugal forces still threaten both NATO and the 27-nation European Union; their impact will determine the shape of world politics long after the war.

At issue is whether the joint commitment of democracies will contain the rise of autocracies, as U.S. President Joe Biden hopes, or whether Russian and Chinese “great power” claims to expanded influence prevail.

In the short term, NATO seems well positioned to sustain its rediscovered cohesion.

Founded after World War II to deter Soviet military expansion, the Western security alliance found itself searching for a new purpose after the USSR collapsed. Its member states began cutting their defense budgets and redirected the “peace dividend” toward spending priorities at home.

Mr. Putin’s invasion changed that mindset almost overnight. German Chancellor Olaf Scholz announced a multibillion-dollar fund to increase defense spending. Virtually all NATO’s European member states moved to help provide weapons and other support for Ukraine.

Most dramatically, Finland and Sweden – democracies on Russia’s western flank long wedded to neutrality as the best formula for coexisting with Moscow – have opted to join NATO.

Olivier Matthys/AP

NATO Secretary-General Jens Stoltenberg meets the media during a press conference at the NATO headquarters in Brussels, Oct. 11, 2022.

Still, the war has also revealed potential signs of future strain. And the move by the two Nordic countries underlines one of them: NATO’s European fulcrum has shifted eastward.

The countries nearest to Russia are the ones that have responded most robustly to the invasion – Poland, the Czech Republic, and the Baltic states, which have experienced Moscow’s domination in the past. But while Germany has begun to increase defense spending, both Berlin and Paris have been far less ready to provide military support for Ukraine than other NATO partners.

The greatest test of NATO’s new cohesion in the long run, though, may lie with its richest and most powerful member, the United States.

Washington has played a key role in forging NATO’s Ukraine policy, and has provided the lion’s share of military equipment to Kyiv. And Mr. Biden has done so with a measure of bipartisan support not seen for years.

But especially if the Republican Party regains control of Congress in next month’s midterm elections, that across-the-aisle mood could begin to wane, at least among pro-Donald Trump legislators.

As president, Mr. Trump dismissed NATO as a protection racket in which European members freeloaded off America. He told security aides that Washington should get out of NATO altogether.

Jacob Turcotte/Staff

European states will also be watching the midterms. During the Trump years, a number of them became convinced of the need to plan for their security future without Washington as a key partner.

Just as Putin’s war has galvanized NATO, it has also brought the EU closer together.

Though founded as a trading and economic bloc, the EU has earmarked large sums to fund military equipment for Ukraine. It has framed the war as an existential contest between an autocrat’s aggression and the “European values” of democracy.

But within the EU, too, the war has revealed potential tensions, especially since energy shortages seem likely to hit hard this winter.

The initial response to that challenge was broadly unified: a move to slash the imports of Russian gas on which a number of member states had come to rely, and, more recently, agreement on a phased end to imports of Russian oil.

But Germany has since decided to go it alone, crafting a $200 billion package to cushion the impact of winter energy costs on industry and domestic consumers. That plan has been criticized by other EU member states for undermining the bloc’s “single market” foundations.

Mindaugas Kulbis/AP

German soldiers take part in a military exercise in Lithuania on Oct. 10, 2022. Enhanced German vigilance in Lithuania is part of an agreement reached after Russia's large-scale invasion of Ukraine in February.

Their hope, echoed by the bloc’s chief executive, Ursula von der Leyen, is for a united response, in which the EU would use its collective muscle to buy energy on the world market and then distribute it among member states.

The bloc’s immediate challenge, as for NATO, is to maintain its unity of purpose in response to the war.  

Russia’s latest missile strikes seem likely to reinforce, not dent, Western resolve. Germany has already responded by sending Ukraine the first of a number of long-delayed air-defense systems.

But securing the longer-term cohesion of NATO and the EU could prove a stiffer test. If they are to meet that challenge, they will need to do more than keep the words of an ancient Roman poet in mind, once the immediate “need” for friends recedes.

Perhaps they should, instead, heed an old Irish proverb: “A good friend is like a four-leaf clover: hard to find and lucky to have.”

The withdrawal of the remaining U.S. armed forces from Afghanistan last year ended America’s longest war and ignited a frenzied evacuation as the Taliban reclaimed power. Hundreds of thousands of Afghans – civilians, government officials, members of the security forces – converged on the airport in Kabul in a desperate attempt to flee.

Scott Mann watched the wrenching scenes on TV at his home in Tampa, Florida, with a mix of despair and frustration. The retired Green Beret, who ended his 23-year Army career as a lieutenant colonel in 2012, had trained Afghan special forces commandos during multiple deployments to the country. When one of them, Nezamuddin Nezami, known to friends as Nezam, asked for his help to get out, Mr. Mann chose to funnel his despair into action.

As recounted in “Operation Pineapple Express: The Incredible Story of a Group of Americans Who Undertook One Last Mission and Honored a Promise in Afghanistan,” he drew from a deep well of military and civilian contacts to assemble a network of like-minded volunteers scattered around the world. Working primarily through a Signal chat room, the group coordinated with U.S. troops on the ground in Kabul to evacuate more than 1,000 Afghans. The first was Mr. Nezami, whose use of the code word “pineapple” clinched his escape and inspired the group’s moniker, Task Force Pineapple.

Mr. Mann spoke to the Monitor from his home in Tampa, where Mr. Nezami is now his neighbor. He discussed the devotion of volunteers to the Afghan cause, the U.S. government’s inertia during the evacuation, Afghanistan’s future, and the prospects for fostering cooperative, public-private efforts to mend rifts in American civic life. 

As the chaos unfolded in Kabul last year, what went through your mind as you weighed getting involved?

When Nezam was initially reaching out to me, I felt isolated in the sense of, “What in the world am I going to be able to do? I cannot believe nobody’s trying to help.” I called the USASOC [United States Army Special Operations Command] and asked the commanding general’s aide, “What are we doing?” And they’re like, “We’re handling it.” But they didn’t.

I had retired from the military because I didn’t like where things were going with the careerism, with Afghanistan, and it took me a long time to put that behind me. I knew that if I did this, it would be very hard to extricate myself, and my family would be sucked back in. But at some point, it just comes down to: This is my friend.

Task Force Pineapple included veterans, service members, and civilians. There were Democrats and Republicans. Some people you had known for decades, others you had never met. At a time of extreme division in America, what did it say to you that such a diverse coalition mobilized to aid Afghans?

It’s easy to be jaded about what happened with the withdrawal. But as I was doing research on this book and interviewing people, the spirit of friendship and loyalty of those who had fought and bled together, and of perfect strangers who jumped into the fray and started helping – that was so uplifting. I sometimes would finish interviews and put my head down and weep because it was such a beautiful display of humanity.

I went through Pineapple’s Signal chat room and reviewed tens of thousands of messages, and President Biden was mentioned once and former President Trump zero. I thought, “These men and women are showing us exactly what leadership looks like. They’re showing us exactly how we need to behave as a nation.” What if we tackled all of the issues in our country that way?

But as you write, the emergence of your group and others underscored the relative inaction of political and military leaders.

There were two questions that I asked myself on the other side of this: What does a promise mean to you? And how far would you go to honor it? As I started looking at how those questions were answered, boy, was there a contrast between the volunteers and the institutional leaders.

At a diplomatic level, the State Department issued – through the National Security Council – a memorandum of priority for evacuation on Aug. 14 [one day before Kabul fell to the Taliban]. That’s ridiculous, and it shows how hasty everything was. The fact that there was not a single Special Forces team on the ground in the several months leading up to the withdrawal is egregious. That’s not on the teams; that’s on senior leadership. It was wholesale abandonment of our Afghan partners.

You name names in your criticism of military leadership, including Army Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff. How have top officers reacted?

I’ve lost friends over it. A lot of senior leaders who mentored me don’t talk to me anymore.

You write that escaping Kabul was only the first step in the arduous, ongoing journey for Afghan refugees. How are Nezam and his family adjusting to America?

When it was time for them to come out of the refugee camp at Fort Dix [in New Jersey], I asked the team, “Would you be willing to help me sponsor them?” So we went out into the community and asked for help, and we had donations come in that allowed us to put him and his family in a three-bedroom, two-bathroom rental house down the road from me. People donated all the furniture, a car. And Nezam came in like a true commando. He got his kids enrolled in school, he got his driver’s license within weeks, he finished his GED, and it looks like he’s now landed a really good job with an aircraft company.

All that said, it has been very difficult. He gets phone calls every day from his commando brothers in Afghanistan asking for help. Some of them are angry that he’s in a book and they’re starving and dying. He’s racked by that. So we’re trying to go slow. For most Afghans in resettlement, unless they have a sponsor living right next to them, it’s a safe bet they’re struggling.

The West appears resigned to the Taliban ruling Afghanistan for the foreseeable future. How do you view the country’s future given what U.S. troops – including yourself – fought for there?

I wouldn’t count out the Afghan people at all. That’s what I tell anybody who asks, “Was the war worth it?” Look, 8 million boys and girls went to school. Women had the opportunity to step into their power like never before. There was relative democracy for 20 years and an unprecedented level of civil society engagement, particularly in urban areas. I think the Taliban’s hold on power is tenuous at best, and I think you’ll see women, educated youth, and former special operators who we trained playing a very big role in the resistance. The question is, what role is the United States going to play?

Task Force Pineapple and similar groups formed to help people on the other side of the world. Is there any chance of nurturing that kind of cooperation to benefit our own communities?

A component of the work we did that really heartens me is this privatized approach to solving hard problems, where people look around and say, “OK, nobody’s coming. I’ll lead.” I do believe we’re overdue for the upswing that Robert Putnam talks about in his book “Bowling Alone” that happened in the early 1900s – an increase in social capital, bottom-up leadership, and privatized efforts. Alcoholics Anonymous, the NAACP, and the Rotary Club all formed during that time. Pineapple is some version of that, and there is a real opportunity for us to build on that here at home, based on the volunteer spirit I saw. But the government is also going to have to wake up. 

One sunny Saturday, a couple meander through orchard rows grasping opposite ends of a stick, two full harvest bags of apples slung between them. They pass other families, spaced along the length of the grassy path, cast in afternoon sunlight dappled by the squat trees. The pickers talk in hushed tones, searching for the right adjectives to describe the immense flavor of the half-eaten fruits in their hands.  

Nearby, a tractor drags a long wooden platform piled with people and hay bales. Its driver grips a yellow apple between his teeth as he stands up proudly, hands on hips. His teenage assistants usher guests on board and trade side-eyed smiles, silently acknowledging their shared responsibility over the hectic scene before them.

Six-year-old Charlotte is a veteran apple picker. “We come here almost every year,” she says. “The ones we just picked over there are my favorite, but I also like the sour ones.”

To the uninitiated, the apple-picking pilgrimage may seem an odd way to spend an afternoon. Are the entry fee, long line of cars, port-a-potties, and parking lot politics really worth their weight in autumn fruit? 

Melanie Stetson Freeman/Staff

One more apple is added to a bag of assorted varieties. Visitors pay for apples by the bagful.

For the crowd at Honey Pot Hill in Stow, Massachusetts, the experience seems to capture all the metaphorical significance of those few short months between summer and winter when the sun is warm and the breeze is cool, when the impermanence of the seasons is a tangible presence in the air. 

“Do we have to get off here?” Charlotte asks her parents. “But it’s so much fun.”

Melanie Stetson Freeman/Staff

Rob Velt throws an apple down to his new fiancée, Danielle Calder. He just surprised her by proposing a few minutes before.

Melanie Stetson Freeman/Staff

A hand-written sign directs visitors to McIntosh apples. The orchard grows about 25 apple varieties on a 186-acre farm.

Melanie Stetson Freeman/Staff

An apple hangs ripe and ready to pick. Honey Pot Hill has been in the Martin family for four generations.

Melanie Stetson Freeman/Staff

The Chen family and some neighbors meander through rows of apple trees with a wagon to help carry produce.

Reuters

People walk near the Lebanese border as Israeli navy boats patrol the Mediterranean Sea.

Technically, Lebanon is still at war with Israel. And its most powerful political force, the Iran-backed Shiite militia called Hezbollah, still regards Israel as a sworn enemy. Yet on Tuesday, Lebanon and Israel agreed to an American-brokered deal that resolves a dispute over their boundary in the eastern Mediterranean and the natural gas under the seabed. The deal makes history in many ways, not least in Hezbollah’s indirect recognition of Israel but even more in the blow to its violent attempts to impose Iran-style rule by clerics.

The real victors in the agreement are Lebanese youths who, during mass protests in 2019, demanded an end to the use of religion in politics and a focus on secular democracy that treats citizens as individuals, not as mere members of a demographic group. Their demands also included a reform of Lebanon’s shattered economy – including the tapping of offshore petroleum.

In elections last May, this pro-democracy shift led to Hezbollah and its political allies losing their majority in Parliament and an increase in independent, reform-minded activists. As one protester put it, “The people are one – Shia, Sunni, Christian, they’re all one here.”

Most of all, young Lebanese no longer see Israel as a threat but instead oppose Hezbollah’s attempts to create a theocracy like that in Iran – where weeks of mass protests have challenged the regime’s brutally enforced rule by unelected clerics. In Iraq, too, young people protested in 2019 against Iran’s influence, resulting in pro-Iranian parties losing their majority in a parliamentary election last year.

Iran’s protests began in mid-September with the death of a young woman in police custody after she was arrested in Tehran for improper head covering. They have spread to many cities but also shifted toward demands of equality. On Tuesday, for example, Iran’s main medical association issued a statement signed by some 800 doctors that proclaimed “the people as the real owners of the country.”

In Lebanon, Iraq, and Iran, people cherish freedom of conscience and democratic rule of law, not a theocracy that denies such rights. Lebanon had many reasons to settle its territorial dispute with Israel – for petroleum wealth and economic stability. Yet its ability to even cut the deal required a push for good governance from the Lebanese. That push began with their claim to liberty, not limited liberties granted from on high.