From American Dream to National Nightmare: Our Obsession with Homeownership Has Gone Too Far
The real lessons of the housing crisis have gotten lost. It's portrayed as the financial system run amok; the housing market became a casino. The remedy is to enact rules that prevent a repetition. All this is partly true. But it ignores a larger and more important truth: our infatuation with homeownership, embedded in dozens of government policies, has turned housing—once a justifiable symbol of the American Dream—into something of a National Nightmare.
As a society, we're overinvesting in real estate. We build (and buy) too many extra-large homes. McMansions, if you will. They use too much energy, and their carrying costs, including mortgage payments, absorb too much of Americans' incomes, limiting the ability to save for retirement and other needs. We think everyone should become a homeowner, when many families can't or shouldn't. The result is to encourage lending to weak borrowers who are likely to default. The avid pursuit of a few more percentage points on the homeownership rate (it rose from 64% of households in 1994 to 69% in 2005, see chart above) has condoned enormously damaging policies.