I happened to watch an old movie last night. Mr. Blandings Builds His Dream House. 1948. Cary Grant, Myrna Loy, Melvyn Douglass. A gentle comedy about a (generally) gentle man acting rashly, getting in over his head, coming out of it OK (because, after all, it's a Hollywood production).
What particularly caught my attention was that "in over his head" had two dimensions -- practical and financial. In practical terms, we saw an apartment-dwelling Manhattanite purchasing run-down rural property (in the wilds of Connecticut, no less!), getting caught up in all the stochastic variability that is custom residential construction (pretty much the only type of residential construction that existed in 1948, I believe), and being forced to accommodate his expectations to the behavior patterns of those quaint rural New England trades-folk. Like I said, gently amusing.
In terms financial, we saw a man with a family of four, earning $15,000 a year (at a time when the median annual US household income was about $3200), ending up with a total expenditure of some $32,000 to build his (and his wife's -- never underestimate a Myrna Loy character) dream house. Four bedrooms, three baths, multitudinous closets, quarters for the maid, a separate sewing room, flagstone floors in part of the house, built-ins and cabinetwork galore, about 3000 square feet by the look of it. After 90 minutes or so of one unanticipated expense after another, the guy ends up with a mortgage that's on the order of twice his gross earnings. Comedically horrific, right?
To put things in perspective, mortgage interest rates at that time were 4.5 - 5%. Taking the higher number and presuming that Blandings financed 100% of his housing expense (highly unlikely, and the screenplay does make reference to him selling some assets to provide the down payment, but still . . .), the monthly principal and interest payment (presuming 25 year amortization) would have been about $187 per month. Over 15 years, it's $253/mo. Those numbers equate to 15% and 20% of his monthly gross, respectively. Add enough for taxes and insurance (not normally administered through home mortgages in those days), and Blandings was still probably below the 28% of gross which responsible underwriting guidelines have generally allowed for housing expense.
Put it this way. What two generations ago was considered comedically extravagant even for a guy making about 5 times the national average, we now consider normal for the middle class.
As a society, we now dream far, far larger than that.
And with less humor.
Then we wonder why "the American dream" is unsustainable.