Smaller Households, Bigger Houses, Smaller Lots

(Bloomberg Opinion) -- The average U.S. household is 24 percent (or 0.82 people) smaller than it was in the early 1960s. This downtrend has flattened out a lot since the Great Baby Boomer Move-Out of the 1970s, and household size has even on occasion gone up for a year or two — sometimes due to recessions keeping young people with their parents and sometimes due to data revisions, although last year saw a slight uptick perhaps caused by millennials finally getting married.  Still, there are markedly fewer Americans per house or apartment than there were a few decades ago.

Despite this, the median new single-family house completed in the U.S. in 2017 was 59 percent bigger than it was in 1973.

Rental apartments, of which there were more built in 2017 (336,000) than at any time since 1999 (which is how far back that particular data series goes), aren’t getting much bigger. That’s partly because they’re increasingly being stuffed into 50-plus-unit buildings in urban centers, a phenomenon that I wrote about last week.

Both that column and this one draw on the Census Bureau’s Characteristics of New Housing database, which was updated June 1 with the numbers for 2017. It’s a cornucopia of fun housing information. Want to know what percentage of single-family houses completed in the U.S. in 2017 have the laundry in the basement? (Just 2 percent, down from 6 percent in 2009.) What percentage of the new rental apartments completed in 2017 have fireplaces? (Just 1 percent, down from 14 percent in 1999.)

I’ll concentrate on house size here, though. Another way to measure it is the number of bedrooms and bathrooms. Houses with lots of both have become much more common.

Then there are garages. They can fit more cars than they used to — while the carport (a covered but otherwise open-air home for one’s motor vehicle) has become a thing of the past.

The addition of a three-or-more-car-garage category in 1992 makes it a little hard to see the trend, but 85 percent of new single-family houses completed in 2017 came with a garage that fits two cars or more, up from just 39 percent in 1971. The increase has slowed markedly in the past decade and a half, though.

Meanwhile, even as new houses keep adding all this stuff, the lots upon which the houses are built keep getting smaller.

None of the trends identified above will be shocking to anyone who has driven by a new subdivision in the past decade or two. It is interesting to see the slight downtrend in house size and number of rooms since 2015, which is probably due to the aforementioned rise in the number of millennials settling down and buying starter homes after a Great Recession-induced delay.

The rise of the four-plus-bedroom, three-plus-bathroom house with a garage that can fit three or more cars is partly a matter of changing tastes and, you know, de gustibus non est disputandum. Then again, in their famous 1977 American Economic Review article by that name, future Nobelists Gary Becker and George Stigler argued that what were often dismissed as matters of taste could usually “be explained by a generalized calculus of utility-maximizing behavior.” In that vein, one cause of new-house growth has surely been that Americans in the top 20 percent of the income distribution have a lot more money to spend than they did four decades ago, and many have chosen to maximize their utility by spending some of it on guest bedrooms, home offices and extra bathrooms. They have been given added incentive to do so by the home mortgage interest deduction, which has risen in value as home prices have. A much-cited 2017 study of the effects of a big change in the home mortgage interest deduction in Denmark found that the deduction appeared to have no impact on the homeownership rate, but it did induce people “to buy larger and more expensive houses.” So it will be interesting to see if the reduction of the deduction in last year’s U.S. tax legislation induces a long-term slowdown in bathroom construction.

Finally, I do want to dispute one matter of taste. Carports were a trademark of one of the greatest 20th-century architectural creations: the mid-century modern suburban house. Their demise is a trajesty.

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