The real moral is that when a middle-class couple buys a house they can’t afford, defaults on their mortgage, and then sits down to explain it to a reporter from the New York Times, they can be confident that he will overlook the reason for their financial distress: the peculiar willingness of Americans to risk it all for a house above their station. People who buy something they cannot afford usually hear a little voice warning them away or prodding them to feel guilty. But when the item in question is a house, all the signals in American life conspire to drown out the little voice. The tax code tells people like the Garcias that while their interest payments are now gargantuan relative to their income, they’re deductible. Their friends tell them how impressed they are-and they mean it. Their family tells them that while theirs is indeed a big house, they have worked hard, and Americans who work hard deserve to own a dream house. Their kids love them for it.
Across America, some version of this drama has become a social norm. As of this spring, one in 11 mortgages was either past due—like Ed McMahon’s $4.8 million jumbo loan on his property—or in foreclosure, like Evander Holyfield’s $10 million Georgia estate. It’s no good pretending that Americans didn’t know they couldn’t afford such properties, or that they were seduced into believing they could afford them by mendacious mortgage brokers or Wall Street traders. If they hadn’t lusted after the bigger house, they never would have met the mortgage brokers in the first place. The money-lending business didn’t create the American desire for unaffordable housing. It simply facilitated it.
It’s this desire we must understand. More than any other possession, houses are what people use to say, “Look how well I’m doing!” Given the financial anxieties and indignities suffered by the American middle class, it’s hardly surprising that a lower-middle-class child who grows up in a small house feels a burning need to acquire a bigger one.