Rising house sizes are NOT an accurate measure of wellbeing

AEI employees, James Pethokoukis and Mark J. Perry, both wrote separate arguments that Americans are “substantially better off” now than in the 1970s because, as Pethokoukis titles his essay, “The median US home is 61% larger than 40 years ago.” But his title is misleading. His data actually shows the median NEWLY CONSTRUCTED home is bigger. That is NOT the median home that Americans live in. The housing market has been focusing on upper-income Americans. In the 1950s, American home builders seem to have been more focused on building new homes that the average American could afford because the median size of new home construction was about the same as it was in the 1920s. That is no longer the case. Americans near the median are lucky to be able to afford a house at all, much less a brand new house. Less than 63% of American households own their residence which is the lowest rate since the Census Bureau began keeping records in 1965. If housing is getting better, why are fewer Americans able to buy houses? More Americans near the median are renting.

Furthermore, new housing is very unrepresentative of all housing. Only about one percent of American households move into a newly constructed house in any given year and they are quite different from the average American household. Below is the data that the AEI writers think paints an optimistic picture of American prosperity:

Here is Mark Perry’s bottom line:

We hear all the time about stagnating household incomes, the decline of the middle class, rising income inequality, and lots of other stories of gloom and doom for Americans. But when it comes to the new homes that Americans are buying and living in, we see a much brighter picture of life in the US. The new homes that today’s generations are buying are larger by 1,000 square feet compared to the average new homes our parents might have purchased in 1973, and are almost double in living size today adjusted for household size compared to 40 years ago.

Unfortunately the Americans that Perry is talking about are fairly elite. We don’t have data about the income of brand new home buyers, but it is clearly well above the median income today. This data doesn’t make a brighter picture of life in the US for anyone but the upper class and upper-middle class at best and there is no dispute that they have done well during this era of rising inequality.

Posted in Medianism

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