The financial crisis forced Americans to act more responsibly. Less debt. More saving. According to Bloomberg, “Consumers in the U.S. are spending more closely in line with their incomes than in any expansion in the past 48 years.”
But something interesting happened. McMansions bounced back with a vengeance. The median square footage of a new home is now at an all-time high:
What’s going on?
The Wall Street Journal gives an explanation, quoting Stephen Melman of the National Association of Home Builders:
The first-time buyer now has to come up with 20% down payment and a pristine credit score, and that’s harder to do. If the [remaining] buyers are trade-up buyers, you’re going to end up with larger, more expensive homes.
So, new homes are getting bigger because more new homes are going to older, richer buyers. This is why luxury builders like, say, Toll Brothers Inc (NYSE:TOL) have done reasonably well in the last few years.
But there’s more to it than that. Average American homes have been getting bigger and stuffed with more amenities for decades. The rise in average square feet is a continuation of a trend that started long ago.
Take a look. (All of these charts are made with data from the Census Bureau’s annual Characteristics of New Housing report).