In Japan, a middle class family can own a somewhat cramped (say 900 sqft?) 3bedroom house/apartment walking distance to a world class rail system and generally walking distance to schools and some stores too.
In America's top cities, a middle class family can't afford to own a 3 bedroom apartment with rail access generally, so they move outside the city to the suburbs where they often have to drive to work - which means they need to buy a car, buy gas, etc
But if you don't want the lawn and the picket fence, why is this the only option available? We've taken a one-size-fits-all approach with covering the vast majority of the country with big suburban houses, and the free market is proving people want options, evidenced by wildly inflating prices of urban properties.
What are you talking about? The collateral is the full property, not just the structure.
Its fair to say that the jobs could move to other city centers, but the solution isn't suburbia.
What would it take for America to have 20 New Yorks, instead of 50 Atlantas [1]
[1]: https://www.citylab.com/life/2014/04/ranking-most-sprawling-...
A better way may be to create new urban centers or develop lesser ones.
That creates a very different lower-density city. Think about a sprawl like LA rather than a squeeze like Manhattan. Public transport won't work but parking spaces might actually exist. Your Afghan Bagel place will be 1 hour drive rather than 15 minute by subway on the way to work etc. More space, but less selection and diversity in terms of food, entertainment and other venues.
But they also live in small apartments and homes. I'm not convinced that Tokyo is a good example here.
The key to this problem is to have jobs in places that aren't large urban centers. This way the population spreads out and housing becomes more affordable.