The size of new homes has dramatically increased over the past 50 years, while the size of the average family has decreased. In 2015, the median size of a new construction home was 2,476 square feet compared to 1,525 in 1973. During this time the average size of the US family has decreased from 3.48 people in 1973 to 3.14 people in 2015.
There are many measurable reasons for the increase in the size of homes, including energy efficiency, historically low borrowing rates, and improvements in the building process. But perhaps the biggest reason is the increase in the consumer mindset of Americans. Advertising has really stepped up its game in the age of color TV and more specifically the internet. Whenever you pull up social media or a web page on your phone or laptop, you are inundated with ads.
It appears that for many generations, the definition of success in America included home ownership and a white picket fence. I’m fairly certain that today, people are not even allowed to buy a home without posting about it on at least one social media platform to show their social network that they have finally “made it” and are “adulting.” Even if that means buying more home than a person, or couple, needs or can afford because their lender told them they could. Family pressures to buy a big home don’t help the process either.
I’m sure many people (including myself) feel that they are rational when it comes to sorting through societal norms and peer pressures. But when it comes to home ownership, it seems to cut right through rationality and objectiveness. Our brains turn to jello and we believe we NEED the 3,000 square foot house that was built in the last five years.
Almost every house needs a foundation, hot water heater, furnace, kitchen appliances, bathroom, etc. These are the more expensive parts of the building process. Comparatively, adding a three car garage and an extra bedroom or two isn’t that expensive comparatively. Adding cheaper square footage actually decreases the cost per square foot of the house as a whole, which gives the illusion of a bargain to the buyer. Additionally, owning a bigger home also brings higher ownership costs. These increased costs can include utilities (heating and cooling), property taxes, insurance, maintenance, etc. Increased space can also lead to indirect costs, such as furniture to furnish rooms that no one ever enters.
Even though we are armed with all this information, it’s hard to look at a nicely constructed, newer, big house without a desire to own something similar. Just imagine how hard it is for someone to be rational and objective to make a well thought out decision when it comes to buying a home. In the end, we need to educate ourselves and understand that at times we may be irrational in the home buying process, to try and eliminate those potential costly mistakes.