Overwhelming Evidence IV: Good Old Days Are Now
The top graph was featured in yesterday's WSJ (thanks to Cafe Hayek), showing the 50% increase in median size of a new single-family home in the last 25 years, from 1500 sq. ft. in 1982 to 2,250 square feet today.
And not only is the typical new house larger today by 50% vs. 1980, the percentage of homes with features like dishwashers, garages, central heat and air, 2 or more bathrooms, fireplaces, and garbage disposals has increased significantly as well since 1970 (see middle chart above, from the Federal Reserve of Dallas).
Question: But don't today's larger homes with significantly more features cost more than the smaller homes in the past? Not really, at least not when measured by "hours of work at the average hourly wage per square foot."
For example, in 1920 the typical cost a new home was $4,700, which was 7.8 hours of work at the average wage, per square foot. In 1956, the typical home cost of $14,500 represented 6.5 hours of work per square foot, and by 1996, the cost fell to 5.6 hours per square foot (see bottom chart above).
Bottom Line: Today's homes are larger, have significantly more features, and yet cost less per square foot on an inflation-adjusted basis than the homes of our parents and grandparents. On a personal note, most of the homes I lived in as a child had only 1 bathroom, and we had a family of 8 (6 kids)!
See previous posts on this topic here, here, here, here, and here.