Little Pink Houses

I’m paying bills today: an unpleasant activity in which I engage once or twice per week. Among them is an insurance premium for a small rental property that I own by accident. I know that sounds odd, but the abbreviated story is that the accident involved a business deal during the real estate market meltdown of a decade ago. The property pays for itself (just barely), so I haven’t been in a rush to offload it even though (and to some extent because) it has not recovered its value of a decade ago. Besides, I might move there myself one day as an economy measure. I’m calling the house small, and it certainly is by today’s standards, yet it’s a kind of house built in large numbers after World War 2 when people were glad to get them. It’s smaller than the first house my parents built for themselves in 1948, but in many ways it reminds me of it. (Their house wasn’t actually pink – nor is mine – but that wasn’t an unusual color in the 50s; Mamie Eisenhower’s fondness for pink helped keep it fashionable even in interiors; my parents’ next house built in 1959 had a pink tiled bathroom.)

My parents building their first house
in 1948, age 22 and 20. Folks started
earlier then

The size of new houses in the US has grown decade by decade. Historical average square footage of new single family houses (i.e. not including apartments and condos) is below:

1950: 983

1960: 1,289

1970: 1,500

1980: 1,740

1990: 2,080

2000: 2,266

2010: 2,392

2018: 2,641

For those who don’t do feet, the conversion factor for square feet to square meters is 0.09290304. (My rental house, btw, is below average for 1950.)

Meantime, as area has grown, families have shrunk decade by decade, so living space per person has risen rapidly. Between 1970 and 2018 individual space in new homes doubled to its present size of 971 square feet per person: not much less than the entire footage of a new house in 1950.

The rise in size took place not just because builders were meeting the increasingly expansive demands of customers. The largest single reason for the change is restrictive local zoning, which makes the modest tract homes of the 40s and 50s impossible to duplicate on anything like the same scale in today’s most desired metropolitan areas. Accordingly, the 1950s were the last decade when single family homes truly were affordable to average working young people. 

What brings this to mind is not just the aforementioned insurance premium, but the most recent (and characteristically amusing) book by former National Lampoon editor P.J. O’Rourke: None of My Business – P.J. explains money, banking, debt, equity, assets, liabilities, and why he’s not rich and neither are you. The subtitle pretty well explains the gist of the book, but one chapter in particular caught my eye. The chapter is “The Price of Being Middle Class.” He writes of 1952 when his 5-member family’s lifestyle was financed by $10,000 per year with his father as the sole wage earner. The house cost $21,000. This was upper-middle class at the time, but not by a lot. According to the Bureau of Labor Statistics overall prices have gone up 9.3 times since then. The “overall” is the joker. Some things are cheaper and some more expensive in constant dollars. TVs are cheaper today – and far better. Food is cheaper today in inflation-adjusted terms assuming you aren’t buying it in trendy restaurants while getting your coffee at Starbucks – as many folks now often do. Other things are vastly more expensive, however, and they tend to be big-ticket things of the sort that keep recently graduated Millennials from getting a toe-hold on financial independence: among them are education (for which they are still paying after graduation), cars, and housing. O’Rourke’s 1952 house in a comparable neighborhood in 2018 would not be $195,300 (9.3 times 21,000), but at least half a million – maybe hundreds of thousands more than that, depending on the particular metro area. The higher costs don’t stop with the initial purchase: the ongoing cost of owning a comparable house (notably property taxes, which support primary and secondary education) has soared in real terms. O’Rourke concludes that “to live an ordinary middle-class life, you have to be rich.”

A missing step for younger people trying to build assets in the way my parents’ GI Generation (and to a lesser extent Boomers) did is the availability of modest new homes at modest prices: homes of the sort built in abundance for 15 years after the war. [Aside: the current common preference of zoning officials for condos over small houses – if they decide they must allow for one or the other – is in part fiscally driven; there are usually very few 3 or 4 bedroom units in the mix, and 2-bedroom condos have been found to house few schoolchildren, so condos, unlike small houses, provide a net tax benefit to a town.] If new small homes were still available in large numbers, though, would Millennials buy them? Economists used to say “supply creates its own demand.” While it’s fashionable these days to dispute this, it really is true. So yes, at some price the homes would sell, though to very different customers from the 1950s. The customers would include many young singles (many of whom are likely to be single for life) who presently are not always so much “choosing” to live in apartments as recognizing they can’t afford anything else. Perhaps the demand would not be enough for the homes to sell at profitable prices, however, even if zoning laws were as liberal (and building lots consequently as cheap) as in 1950, in which case new construction of them would stall. No generation is uniform, of course, but the percentage of this one preferring the suburbs may be much smaller from earlier generations. We’ll never know, since no such broad zoning reform is on the horizon.

The generation in their 20s after WW2 by and large had very different hopes and expectations than people commonly do today. After global Depression and devastating world war they wanted no more excitement. They wanted normality: a secure job, a cozy marriage, an affordable ranch or Cape Cod in the suburbs, and a Buick in the driveway. They called it (in this country anyway) the American Dream. The song in the video clip below from Little Shop of Horrors was intended as parody, but it really does express aspirations commonplace six or seven decades ago. If there is any doubt, try the Harry James/Kitty Kallen number I’ll Buy That Dream from 1945 (not intended as parody at all) with the lyrics “We'll settle down in Dallas/In a little plastic palace.” Today we tend to set our dreams far higher and our expectations far lower: a recipe for dissatisfaction if there ever was one.

I don’t have any grand conclusion from all this other than that it is a very different world from the one in which I grew up. But then it always is for anyone who lives long enough. If I do end up moving to the little house for which I just paid insurance, however, it might not be so different after all.

Ellen Greene – Somewhere That’s Green