Trouble at Home
Did Generation X’s nesting mania spark the economic meltdown?
by Susan Gregory Thomas
December 22, 2008
ALL I WANTED WAS A PEPSI
Apparently, Gen-Xers didn't question the banks' pretzel logic any more than we did our own. We trusted ourselves; the banks trusted us; we trusted the banks. "It's almost as if we became giddy children, finally getting the apology and consolation prize we'd always secretly hoped for."Again, so sayeth the numbers. According to the GSS, members of Generation X in 2000 had more faith in the financial industry than previous generations at the same ages. Nearly thirty-four percent of Gen-Xers said they had "a great deal of confidence in banks and financial institutions," compared with 24.6 percent of older baby boomers and a scant 12.8 percent of younger baby boomers. Evidently, we were so sure of our own phoenix-like capabilities that it didn't strike us as odd that the banks should be so magically sure of us too.
In a Psychology 101 way, it kind of makes sense. One of the notorious legacies of Generation X's home-alone childhood is an abiding suspicion of authority. 
All this has been well-documented, i.e. we hate ass-kissing the boss, so just let us do our thing because we rock as self-starters. But when the whole house bubble started to swell, the dynamic shifted: Enter the banks, as approving parents.
They gave us a home! It's almost as if we became giddy children, finally getting the apology and consolation prize we'd always secretly hoped for: You didn't get a real home as a kid, but you worked hard, succeeded on your own steam, and now we're going to give it to you and your children. The 1980, 1990, and 2000 GSSes reflected our self-satisfaction. A whopping 66.4 percent of Generation X affirmed the statement: "People get ahead through hard work, not luck." Welcome home. You earned it.
BIG TIME
Now, we were ready to start spending even more. 
The Harvard report's analysis was that Generation X's unprecedented confidence in its own grit, coupled with its equally high trust of banks, would translate into "higher likelihood of investment and consumption," and further, that "members of Generation X may be more likely to use banks for refinancing activity, leveraging home equity, and generally sustaining high levels of consumption."
They're so smart at Harvard. During the housing bubble, Generation X did, indeed, spend more on home remodeling than baby boomers spent when they were of the same age ($2,220 per year, compared with $1,400). We started taking out Home Equity Line of Credit (HELOC) to pay for that remodeling, and the banks let us, because the housing market was so screaming. In 2005, home equity was valued at $9 trillion, having more than doubled in a decade. We banked on it; everybody who owned a house banked on it. Indeed, the Harvard study reported that home equity alone was homeowners' most important asset, that two thirds had more home equity than stock wealth.
