New US homes today are 1,000 square feet larger than in 1973 and living space per person has nearly doubled
AEIdeas
The Census Bureau recently released its annual report on “Characteristics of New Housing,” with more than 700 pages of detailed data on the characteristics of new single-family houses and multifamily buildings in 2015. Here are some interesting details of new single-family houses built last year
1. Average/Median House Size. In 2015, the average size of new houses built in the US increased to an all-time high of 2,687 square feet (see dark blue line in top chart above), and the median size new house set a new record of 2,467 square feet (see light blue line in top chart). Over the last 42 years, the average new US house has increased in size by more than 1,000 square feet, from an average size of 1,660 square feet in 1973 (earliest year available from the Census Bureau) to 2,687 square feet last year. Likewise, the median-size house has increased in size by almost 1,000 square feet, from 1,525 square feet in 1973 to 2,467 last year. In percentage terms, both the average and median size of new US houses have increased by 62% since 1973.
2. Living Space per Person. While the average size of new US houses has increased over the last 42 years, the average household size has been declining over that period, from 3.01 persons per household on average in 1973 to a new record low of 2.54 persons per household in the last three years (2013, 2014 and 2015), a reduction of almost one-half persons per household over the last 42 years (see brown line in top chart).
With the average new house in the US getting larger in size at the same time that American households are getting smaller, the square footage of living space per person in a new US house has increased from 507 to 971 square feet using the median size house, and from 551 to 1,058 square feet using the average size house. In percentage terms, that’s a 92% increase for both the median or average house size per person. Amazingly, the average amount of living space per person in a new house has nearly doubled in just the last 42 years!
3. New Housing Construction Costs. What about the cost of new houses over the last 42 years? On a per square foot basis using median house sales prices and median square footage, the inflation-adjusted price per square foot for new houses (in 2015 dollars) has been relatively stable since 1973 in a range between about $107 and $128 per square foot at an average of about $116 (see bottom chart above). The price of just more than $120 per square foot for new houses sold in 2015 was 8.5% below the peak of $131.29 (in 2015 dollars) per square foot for a new house in 2005.
Bottom Line: We hear all the time about stagnating wages and household incomes, the decline/demise/disappearance of the middle class, rising income inequality, and lots of other narratives of gloom and doom for the average American. But when it comes to the new houses that Americans are buying and living in, we see a much brighter picture of life in the US. The new houses that today’s generation of homeowners are buying are larger by 1,000 square feet compared to the average new houses our parents or grandparents might have purchased in the 1970s, and have almost twice the living space per person compared to the new houses built 42 years ago.
And today’s new houses, compared to those built in the past, are much more energy-efficient; they come with better, bigger and more bathrooms, closets, fireplaces, and garages; they’re equipped with better and more home appliances; and they almost all include modern features like central air conditioning today (93% in 2015) that were expensive luxury options in previous decades like the 1970s (fewer than half the houses built in each year between 1973 and 1976 had air conditioning). Americans are paying about 70% more today for a median-priced new house on an inflation-adjusted basis compared to a 1973 house, largely because the size of the median house today is larger by almost 1,000 square feet and by 62%. So on an inflation-adjusted basis, Americans are actually paying only slightly more today for a new house on a per square-foot basis ($120) than in 1973 ($114.42), for homes that are of higher quality and more energy-efficient with more features like air conditioning, fireplaces and multiple garages. Overall, the increasing amount of living space (especially when adjusted for declining household size), the improvements in housing quality, the increased number of features, and relative affordability of new houses today means that living standards continue to gradually, but consistently, improve year after year for millions of Americans.
Related: See Jimmy P’s blog recent post here based on this WSJ article, and see last year’s CD post for 2014 housing data here.
this is a bit of a tricky metric.
new single family homes are a very small part of the real estate market.
most of the big price moves have been in urban areas where single family dwellings uncommon and new homes extremely rare.
i also suspect we have seen a shift back toward urban living from the suburban diaspora of the 60’s and 70’s.
this may not be a terribly representative metric in terms of the typical experience of an american.
New homes aren’t as small as you act. From the 2009 housing survey, we see that the median build year for all homes is 1975. That means, that in just the last 45 years, 50 percent of all homes were built. Around 6 percent of all homes were built in just the five years between 2005-2009; from 2000-2009, 14.3 percent of houses were built, more than any decade in American history. The 1950’s and 1960’s were the next highest decades with roughly 11 percent of all homes being built in each decade.
In short, the housing market is dominated by newer homes.
Edit: since the survey was done in 2009, that means that in only 35 years (1975-2009) 50 percent of all built, not 45 years I said above.
@Ken Is a “home” the same thing as a “house”? You wrote “homes” 6 times, “housing” twice, and “houses” once.
> In short, the housing market is dominated by newer homes.
Does that mean apartments?
You can go check the 2009 housing survey to find the answers if you like.
Hang on Ken-
We got to be careful on the definition of “new.” You are including homes that were built over a period of time. The way the Census Bureau defines them are homes built within the current year.
Depending on the criteria you are using to define “new homes,” your conclusion that new homes dominate the market may be correct. But using the official definition (as Morganovich is) is not correct. As I mentioned, they represent about 1/10th of the market.
Of course we have to be careful. I don’t think morg was being careful. I think he was making an unfounded assumption or at the very least using loose language. That’s why I brought up the 2009 housing survey, where at least “new” is well defined. morg claimed “new single family homes are a very small part of the real estate market”, but provided zero data to support such a statement, didn’t define what “new” meant and didn’t define what “a very small part” meant. Until he does, you’ll have to live with me for not feeling any sort of anxiety over you worrying me about it.
I’m in favor of tight definitions and using emperics to test hypotheses. morg doesn’t do either. That’s my entire point.
He does, though. That’s my point. He’s using the Census Bureau definition. You’re the one playing fast and loose with the definition.
actually ken, i used a VERY specific definition.
you are the one chasing his semantic tail.
“new single family homes” is a well defined term. it’s like saying “nonfarm payrolls”.
if you are not aware of that, blaming me seems a bit of a stretch.
new single family homes are a very small part of the real estate market.
For the sake of hard numbers, new homes are approx 1/10 of the market.
Jon,
Are there good numbers available for how the average and median size of new apartment and multi-family construction compares?
I suspect you would see a similar increase in living space but I don’t have any numbers on it.
I don’t know of any off the top of my head, but I bet something is out there.
greg-
i have looked for that as well an not found anything much.
i suspect (but have no data) that apartment size has been dropping in recent decades. the “post war 6 or 8” is now way out of the price range of most people.
the hottest trend in apartments is micro apartments. many cities have adjusted their zoning to allow for smaller units.
you also see a lot of conversions.
anecdotal, in SF the big trend in the 90’s was adding a bedroom by converting a formal dining room into an extra bedroom.
SF is obviously an extreme market and i’m not sure if that tells us anything about, say, baltimore or austin or chicago, but the big cities have been the places with the biggest price jumps.
i’d be surprised to learn that apartments are getting bigger in terms of footage per inhabitant, but i’m far from expert on this, so i cannot claim to really know what’s going on in many cities.
The Census Bureau report has lots of data on “multifamily units” but not back to 1973 like for single-family homes. In the report on p. 448 it shows median and mean square feet separately for “units built for rent” and “units built for sale” (condominiums and town houses I assume).
For multifamily rental units, the median square feet is about 1,050 per unit, with data between 1999 and 2015, and the trend is flat. For multifamily units built for sale, the median square feet has been trending up slightly, from <1,300 in 1999 to +1,400 in 2015.
“For multifamily rental units,…the trend is flat”</I.
Yes, the square footage on the West Coast is shrinking, but in other areas, such as Washington DC, it is growing. Thus, they balance out to a flat trend.
What the article shows is how much difference location makes in the cost of housing. Housing in Detroit (or Flint, or Calumet MI, 3 Michigan boom towns at different times) would be cheap as the land is almost going begging. Actually the problem is that the expensive places on the coasts are geographically constrained by Water and mountains meaning to find buildable land you have go a long ways. For one example compate the median price house in Indianapolis with San Diego (let alone Fort Wayne vs San Diego)
Only now for the first time do you see employeers deciding that prices in Ca are two hign and offering folks a deal to move to Nashville for a 30% pay cut. (but you still get a better life style). I wonder why all back office work is not moved east for example.
And, of course, houses aren’t nearly the only thing that has gotten bigger. Cars have gotten a lot bigger. And people! Obesity is now the biggest nutritional problem among the poor.
Life has gotten better in most ways that can be objectively measured but people are less happy than they used to be because expectations have increased even faster.
“Life has gotten better in most ways that can be objectively measured but people are less happy than they used to be because expectations have increased even faster.”
I agree.
Greg
“And, of course, houses aren’t nearly the only thing that has gotten bigger. Cars have gotten a lot bigger. And people! ”
Well then, as long as everything expands proportionally, what’s the problem?
Didn’t Edwin Hubble discover this phenomenon in 1929?
In economics everything is connected. What is the lifestyle opportunity cost in paying for all the extra space? Are Americans saving enough for retirement? Do they have enough money to pay to re-train themselves when a robot (or Asian) takes over their job. Do the have enough savings to pay for unusual healthcare expenses? Do both parents work, creating latchkey kids who don’t get the upbringing they deserve? Why IS that big house so darn important?
A lot of those are judgement questions.
Yes, certainly! Getting sucked in to a home and lifestyle you cannot afford and that lowers you and your family’s quality of life is a series of choices. But when someone’s choices costs us money (mortgage/banker bailouts, increased crime, poorly educated citizens, zombie voters etc), then, Houston…. WE have a problem! Dealing with that is also a series of choices for us with real social consequences either way. At the end of the day data/statistics without meaning and actionable choices are lost in the noise and clutter of our times.
Given that these are judgement questions, how can one reasonably answer them?
Who can say whether 971 sq ft per person is enough, too much, or too little?
Who is to say what is “enough” for retirement?
Who is to say if someone had enough for unusual medial bills or retraining?
These are difficult questions with no real answer. The best one can do to prevent damage is to try and have the proper incentives aligned. And the best way to do that is for the market to work. Unfortunately, people are constantly trying to meddle with the market, but (as you say) everything is connected. Lowering interest rates pushes people away from safe savings tools (like bank accounts and CDs) and toward more risky ones (like stocks) in order to earn the same return. It also encourages more current consumption (by signalling the price of money is low), rather than encouraging savings.
D
I can’t speak for anyone else, of course, but my own reason for buying ever larger houses was primarily to give my latch-key kids more room to let off steam while their mom and I were away at work.
I hadn’t previously realized that mortgage/banker bailouts, increased crime, poorly educated citizens, zombie voters, etc. were all caused by houses that are too big. If only we had insisted on legislating maximum house sizes years ago, the world would now be a better place.
We can at least be thankful that some few of us are smart enough to understand the problem, even if the vast majority of those dummies don’t. People shouldn’t be left to their own devices without expert supervision from those of us who know what’s best for them.
a pet peeve here:
what are these “banker bailouts”? that is an utterly misleading description of what happened.
banks were lent money (some by force even if they did not want to take it). they collateralized that loan with assets. they then paid it back, with interest.
the treasury made a profit on the whole deal.
this is a good and proper role for a central bank: lender of last resort.
any fractional reserve lender can become liquid even if they have no nonperforming loans. it’s just a duration mismatch.
you lent money out for 30 years that a depositor asks for today.
so, you borrow from the fed and pay interest on it.
by the logic that calls doing this a “bailout” then a bank loan to a struggling small business that needs to repair it’s drill press and is then paid back with interest is also a bailout.
such a definition is absurd.
lending someone money that they then pay back with interest is not a bailout.
a bailout is what the auto companies got: money that was never intended to be and was never paid back.
using the wrong name for what happened is making a lot of people misunderstand what actually took place in 2008-9.
“Getting sucked in to a home and lifestyle you cannot afford”
No one gets “sucked in to” these things. The people that do choose to. Most people don’t though. The median credit card balance is $0 and roughly 30 percent of homeowners own their homes free and clear. There are indeed people choosing to live irresponsibly, but they are certainly not representative, nor should anyone act like those life styles just happened to these people.
The median credit card balance is $0
I’m not sure where you get that statistic, especially considering the mean is around $15k. What’s your source?
jon-
that $15k is not average for households. it’s average for balance carrying households.
http://www.valuepenguin.com/average-credit-card-debt
among ALL households, it’s only 5.7k.
that explains the zero median.
38.1% of households carry a balance.
thus, the median balance of all households is zero because it falls in the 71.9% that do not.
Ah ok. Thanks Morg. I had missed the “38.1%” thing.
dchase-
“Why IS that big house so darn important?”
i’m not sure that’s the right question. as jon says, it’s a judgement call.
what we can say is that given the prevailing preferences of consumers, bigger houses seem to be in demand.
this is likely just a reflection of greater wealth.
for any given set of preferences around saving, education, other consumption, etc, people seem to now want a bigger home.
the idea that such a thing requires a reduction in other consumption or savings relative to past periods is purely speculative.
if you gain wealth, you can get a bigger house AND save more.
the former need not create a negative trend in the latter.
I would be interested to know whether larger houses implies larger plots. Buildings depreciate in value while land may depreciate or may appreciate, normally depending on location. A larger building implies higher monetary value of depreciation and that is merely higher consumption by another word. (Of course capital expenditure can reduce or eliminate depreciation, but that is another issue). My question is whether new houses have become increasingly items of consumption without the purchasers realising that.