Background
In the previous post we looked at American’s spending on housing doubling since the post-WWII era. From 1950 to 2000, the average home purchase price more than doubled. Are houses just getting pricier – or are we opting for ever bigger abodes in the era of McMansions? What is the trend in the size of American homes?
Findings
- Modest increase in price per square foot: Data for the past 30 years shows that adjusting for inflation, the average price per square foot for new homes has increased only 15%, but..
- Houses are getting a lot bigger: Since 1950, the average square footage of a new single family home has increased 180%, from 938 square feet to 2,631 square feet.
- And fewer people are occupying that home: The average household size dropped from 3.0 in 1973 to 2.5 today. That means that the square footage of living space per person in a new home has nearly doubled to 970 square feet since 1973.
- Yet – we are chucking a lot more stuff into storage units, too: Self-storage rentable space in the U.S. totals 2.5 billion square feet – or more than three times the size of Manhattan. This industry took off in the 1990’s when we were already building bigger houses.
Implications
You shouldn’t blame our nationwide big housing expense on real estate market inflation (though if you are currently trying to buy or rent in certain pricey locations like San Francisco, that’s certainly a challenge). The bigger long-term issue is that we’re buying or renting bigger houses, and putting fewer people in them! Add in our thirst for self-storage and it becomes apparent that we are a consumption society – both the trend in the size of American homes, and the stuff we put in them.
If a family needs to reduce spending substantially, for example to fund retirement, downsizing homes and reducing buying of “stuff” are obvious targets. We’ll see in later posts why this is so challenging to accomplish, and ways to potentially help people do it.
The small print
Average new home square footage back to 1973 is from the US Census; earlier data is a 24/7 Wall Street analysis using various US Census and other data. Average HH size is also from a US Census report. Price per square footage is from the US Census and I used an online inflation adjustment calculator to normalize this price. Public storage data is from the Self Storage Association.
One caveat – I’m comparing the average new home size to the average number of persons in an overall US HH – we don’t know the size of family moving into the new homes so can’t be certain of the average living space trend for the average American; the simplifying assumption is that new home buyers are of average HH size. Also, looking only at new home data – which is the cleanest data on homes available – excludes of course purchases of existing homes which sometimes are smaller, and sometimes are remodeled into something much bigger.