NYT: Life on $7.25 an Hour

[Tom Rinaldo]

22. When houses were going up in value by $25,000 to $100,000 a year or more....

It was easy to rationalize overextending to buy one, to the point where it could have seemed foolish NOT to do so under the circumstance if the option was available.

Yes of course there was risk involved and that risk caught up to millions of folks. But what other ways were there for many working Americans to significantly grow their savings for their retirement years other than to "invest" in home equity? Ask their boss for a raise? We live in a society where those who have money routinely make more money by leveraging it, creating new "income" at levels that the sweat of labor can not possibly achieve. For many of the rest of us the deteriorating labor market has been an accelerating dead end for decades. Everyone knew stories about people who stretched and bought a house they barely could afford if that, only to see it then double in value in three years. Getting a 20% raise in pay is almost unheard of in recent years, but even on a $50,000 a year salary, that's only $10,000 more per year before taxes. Between the late 90's to late 2008 or so homes routinely went up in value by multiples of that. Yes it became a trap for millions, but millions more survived off of the "income" second mortgages provided based on the soaring equity of their houses during thats decade. Desperate times invite desperate measures, and wage stagnation has been the norm for decades, if not worse.

Some, millions even, won that gamble also. I used to live in California and tens of thousands of people cashed out of their homes at huge profits between 2004 and 2008 and moved to states where housing was cheaper. But home is often more than just a place to live, it is a web of connections and emotional ties. Many people resist having to move in order to survive.