Even as the housing market has bounced back, it has become increasingly skewed toward bigger, less affordable homes. According to recent U.S. Census figures, 43 percent of new homes sold for more than $300,000, while just 8 percent sold for less than $150,000. That last number is a sharp decline from roughly 20 percent in August 2011. Looking at 2002 figures, you can see an even more drastic change—that year the number homes sold for less than $150,000 was 30 percent, according to the blog Calculated Risk.
Many have pointed to the possibility of smaller, micro-homes as a solution to the housing affordability problem. I have argued that a shift from sprawl toward smaller homes in denser areas and from homeownership to renting is a key element of the longer-run reset of the economy.
Writing over at Slate, Jordan Weissman wondered whether millennials are likely to become the "first tiny-house generation," citing a Federal Reserve survey that reported nearly half of American renters ages 18 to 29 say the reason they are not buying homes is because they can’t afford a down payment. “It’s possible,” Weissman writes, “that we’ll end up as the generation that shrinks the American home back down to size—not out of desire, but necessity.”
But the sad reality is that the housing market appears once again to favor larger, more expensive homes. In that sense, we are back on the long-term trend.
According to the National Home Builders Association (NAHB), the average square footage of the American single-family home ballooned 140 percent in the past 60 years, from 983 square feet in 1950 to a monstrous 2,679 square feet, the largest ever, in 2013.
The graph below, from the American Enterprise Institute and based on data from the U.S. Census, plots the size of American homes against the size of its households from 1973 to 2013. The size of the average American house has grown consistently, even as the average U.S. household size has decreased.
Though the growing size of the American home was dampened by the Great Recession, it’s rebounded in the last three years. The share of new homes with at least four bedrooms grew from 34 percent in 2009 to 48 percent in 2014, according to NAHB. There are more bathrooms, too: 35 percent of single-family homes had three full bathrooms in 2013, up from 23 percent in 2010.
The trend is not confined to the suburbs; it’s happening in urban centers, too. A 2011 study by Robert Dietz and Natalia Siniavskaia, both with NAHB, used 2009 data to demonstrate that median square footage per person is consistent across cities, as well as suburbs and rural areas.
The chart below, taken from the study, found that urban dwellers are living in homes that are just slightly smaller than those of their suburban counterparts. The average city dweller lives in 1,678 square feet, compared to 1,800 for suburbanites and 1,900 for those living in rural areas. And urbanites are consuming 767 square feet per person, just slightly less than the 800 square feet used by suburbanites.
The truth is that Americans, until relatively recently, lived in much smaller homes. I grew up in the 1960s and 1970s in the less than 1,000 square feet of my parents’ two-family home in North Arlington, New Jersey. Smaller American homes wouldn’t be a departure from the past—they would constitute a return to normal.
America’s bloated house size is a two-sided problem. For one, it’s yet another indicator of the nation’s deepening economic divide. The wealthy are pouring more and more money into trophy homes, while the professional and knowledge classes, too, are demanding more space for family and media rooms. The poor, meanwhile, are crammed into urban quarters or pushed out to older, dilapidated housing in the suburbs.
For another, it funnels precious capital that could be used to invest in skills and technology and to build up our economic assets into unnecessary, energy-gorging homes. That leads to a mere illusion of economic progress, what urban economist Paul Gottlieb aptly dubbed “growth without growth.”