Losing Your Head Over Your House

A few years ago, I was interviewing the former chief executive of a large U.S. company, when our discussion turned to the housing market. I knew that he, like many people who measure their wealth in the tens or hundreds of millions, had at least a couple of vacation homes. He also had a New York City apartment, along with a place in the country. He seemed to have more riding on the housing market than most of us do, so in the course of our conversation I asked him in passing: exactly how many houses do you own? He looked puzzled for a second. Then, after a pause, he yelled out to the hallway for his executive assistant to come in. "How many houses do I own?" he asked her.

In his defense, this was something of a tricky question. At least one of his residences was for sale, and since he'd already moved out of it, he'd skipped over it in his initial count. He also rented at least one of his houses, further muddying the tally. The correct number, if I'm recalling it correctly, was that he owned five homes. Still, there's something disconcerting about someone who can't remember how many houses he owns. It's a reminder of just how big the wealth gap is between the have-somes and the have-a-lots.

I've been recalling this conversation ever since John McCain's housing gaffe back in late August. As first reported by Politico, a reporter asked McCain how many houses he had. His reply: "I think—I'll have my staff get to you." The Obama campaign quickly hit the airwaves with an ad proclaiming the correct number—McCain owns seven homes, worth a total of $13 million—which it used in an attempt to highlight just how out-of-touch McCain is with ordinary Americans.

In a year in which the falling housing market and the resulting crisis on Wall Street have emerged as the major campaign issues, McCain's outsized appetite for homeownership isn't the only mini-scandal involving the candidates' homes. Barack Obama lives in a large, classic Greek revival home on Chicago's South Side worth more than $1.5 million. To buy it, he appeared to have accepted help from Tony Rezko, who helped facilitate the Obamas' home purchase and later sold the family a piece of a side lot that allowed them to expand their back yard. (Rezko, a real-estate developer, was later convicted on bribery and fraud charges.) The deal is arguably the biggest ethical blight on Obama's record, and nearly two years ago, in an interview with the Chicago Sun Times, Obama admitted that although he believes he handled the deal ethically, he failed to appreciate the appearance it created, and he regards it as a mistake that he regrets.

Last week came the third mini-scandal. On Thursday, the New York Times reported on its front page that Joe Biden lives in a 6,800-square-foot lakefront home that's worth nearly $3 million, and that some of the deals he cut to build the home created some appearance problems of their own. According to the Times, "the acquisition of [Biden's] waterfront property a decade ago involved wealthy businessmen and campaign supporters, some of them bankers with an interest in legislation before the Senate, who bought his old house for top dollar, sold him four acres at cost and lent him $500,000 to build his new home." The story further alleged that Biden has used campaign funds to landscape the property, which he has used to hold fund-raisers.

There's an old saying among reporters that three examples of something constitute a trend. To me, the three stories of these candidates and their houses are an interesting reminder of just how passionate people can be about their homes. Obama, McCain and Biden are all savvy, ambitious politicians who realized their finances would be scrutinized as they ran for the White House, but even knowing that, they put themselves in vulnerable positions in able to live in a really nice home (or, in McCain's case, seven of them).

In that, they have plenty of company. At root, the emotions that drove the candidates to buy homes that have caused them to be criticized aren't much different from the passions that lie at the heart of the current financial crisis. Long before the current Wall Street meltdown, the seeds of America's ongoing wealth implosion were sown when so many borrowers took on mortgages they couldn't handle to buy the home of their dreams. Yes, some of these borrowers were snookered into adjustable-rate mortgages they might not have understood. But as is made clear in that clever PowerPoint presentation of those stick figures that attempts to explain the subprime crisis, many of the people who've now defaulted on their mortgages had some inkling the loan might be unaffordable right from the get-go. Just as the candidates put aside any worries over the appearance their housing deals might create, a lot of borrowers managed to put aside their own private worries they were borrowing more than they could pay back.

In a way, Mark Zandi, cofounder of Moody's Economy.com, sees the public's fascination with the candidates' homes as a sign of the times. "It goes to what's bugging us all," he says. "We've got housing on our minds in every respect. It goes to the worry that the boom and now the subsequent bust were driven by a lot of things, [including] lots of things that might not be completely aboveboard. People don't just trust how we got into this mess, and they want to make sure the people we're voting for are completely aboveboard."

Like a lot of voters who are generally skeptical about politicians, I'm never sure that any of them are completely aboveboard. But I'm hardly surprised that, over the last decade, they made some questionable decisions when it came to their homes. If the housing bust has made anything clear, it's that many members of the populace they hope to govern made some pretty shaky decisions, too.