'House Lust' Hits Home
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Down the block from my home, workmen are finishing a new house. Itreplaces a bungalow that had measured about 1,500 square feet. The newhome has a covered front porch, two fireplaces and a finished basement.It comes in at just under 5,700 square feet. What is it with Americansand their homes?
Everyone knows the direct causes of the present housing collapse:low interest rates, lax mortgage lending, rampant speculation. But thelarger force lies in Americans' devotion to homeownership. It explainswhy government officials, politicians and journalists (including thisone) overlooked abuses in "subprime" lending. The homeownership ratewas approaching 70 percent in 2005, up from 64 percent in 1990. Great.A good cause shielded bad practices. The same complacency lulledordinary Americans into paying ever-rising home prices. Something soembedded in the national psyche must be okay.
"House lust" is what Dan McGinn calls it in his book by the sametitle. McGinn documents -- sympathetically, for he dotes on his ownhome -- our housing excesses, starting with supersizing. In Sweden,Britain and Italy, new homes average under 1,000 square feet. By 2005,the average newly built U.S. home measured 2,434 square feet, and therewere many that were double, triple or quadruple that. After World WarII, the first mass Levittown suburbs offered 750-square-foot homes.(Full disclosure: McGinn is a Newsweek colleague.)
"We're not selling shelter," says the president of Toll Brothers, abuilder of upscale homes. "We're selling extreme-ego, look-at-me typesof homes." In 2000, Toll Brothers' most popular home was 3,200 squarefeet; by 2005, it had grown 50 percent, to 4,800 square feet. These"McMansions" often feature marble floors, sweeping staircases, vaultedceilings, family rooms, studies, home entertainment centers and morebedrooms than people.
In a nation of abundant land -- unlike Europe and Japan -- ourhousing obsession is understandable and desirable up to a point. Peoplewho own homes take better care of them. They stabilize neighborhoods.In a world where so much seems uncontrollable, a house seems a refugeof influence and individuality. In a 2004 survey, 74 percent ofwould-be home buyers preferred a new home to an existing house. Onereason is that a new house often allows buyers to select the latestgadgets and shape the design. The same impulse has driven theremodeling boom, which totaled $180 billion in 2006.
"The most exciting thing was just watching the house go up piece bypiece," said one buyer of a new, $380,000 home in Las Vegas. The 50-ishcouple added a pool, hot tub and deck. They love their home.
Homes are a common currency of status. As McGinn notes, many jobs inan advanced economy are highly technical and specialized. "I could tellyou more about (my job)," a woman informed him at a dinner party, "butyou won't understand it, and it's not that interesting." By contrast, ahome announces that, whatever the obscurities of your work, you'vesucceeded. There's a frantic competition to match or exceed friends,co-workers and (yes) parents.
Some house lust is fairly harmless. Several Web sites ( http:/
Other effects are less innocuous. Although house prices recentlyexploded, they have increased only slightly faster than inflation sincethe 1890s, concluded a study by Yale economist Robert Shiller. Therecent sharp run-up may imply years of price declines or meagerincreases. "Buying a bigger house isn't an investment," warned WallStreet Journal columnist Jonathan Clements. It's "a lifestyle choice --and it comes with a brutally large price tag." Not only are mortgagepayments higher; so are costs for utilities, furniture and repairs.
Worse, government subsidizes these supersize homes along withsuburban sprawl and, just incidentally, global warming. In 2008, thetax deduction for mortgage interest payments will cost the federalgovernment $89 billion. The savings go heavily to the upper-middleclass and the wealthy -- the least needy people -- and encourageever-larger homes. Even with energy-saving appliances, those homes arelikely to generate more greenhouse gases than their smallerpredecessors. As individuals and a society, we've overinvested inhousing; we'd be better off if more of our savings went into productiveinvestments elsewhere.
Sociologically, the "housing bubble" resembles the preceding "techbubble." When people paid astronomical prices for profitless dot-comstocks, they doubtlessly reassured themselves that they were investingin the very essence of America -- the pioneering spirit, the ability toharness new technologies. Exorbitant home prices inspired a similarlogic. How could anyone go wrong buying into the American dream? It waseasy.
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