Modernization, smaller homes, and social class

I wanted to come back to a post from earlier this year where an economist argues that modern conveniences mean people can save money by living in smaller houses:

DR. SHILLER: Big houses are a waste. People are still in a mode of thinking about houses that is kind of 19th century. As we modernize, we don’t need all this space. For example, we don’t need elaborate kitchens, because we have all kinds of delivery services for food. And maybe you don’t need a workshop in your basement, either. You used to have a filing cabinet for your tax information, but now it’s all electronic, so you don’t need that, either. And bookshelves, for people who read a lot. We have electronic books now, so we don’t need bookshelves anymore…

DR. SHILLER: Having a big house is a symbol of success, and people want to look successful. People have to know about your achievements. How do you know, really? Who knows what people are doing in their day job? But you do see their house…

DR. SHILLER: When it comes to housing, there are books about this in the last 20 years—including “The New Small House”—that talk about designing houses to look impressive as well as function with a smaller scale.

Just like we’re developing Uber and Lyft and Airbnb using existing resources more efficiently, we can also build houses that are better at serving people’s needs without being big.

All of this could indeed be true. Many of the items people purchased just a few years ago may not be necessary. However: some of the services mentioned above seem to be tied to social class and age. Which people in society are getting all of their food delivered? How many people are doing all their taxes and bill paying online? Who needs space to store books, clothes, toys, electronics, gym equipment, etc.? Imagine a few scenarios of who might trade stuff for a smaller home:

  1. A downsizing well-off couple who wants to move to the big city now that they are empty-nesters.
  2. A recent college graduate who cannot afford a large residence but wants to spend money on cultural options and food.
  3. A professional who works long hours and does not want to care for a large residence.
  4. People who live the majority of their life through the Internet and their smartphone.

On the flip side, imagine people who might still want a larger home:

  1. A suburban couple with a child on the way who want more space for their kids.
  2. A young worker who has saved a little money, wants to put down roots in a community, and invest in something that will probably rise in value over the decades.
  3. People who like to have friends and family visit or who want to gain some extra income through hosting people.
  4. Numerous Americans who think a larger home is a better deal given that they can use the space, they like to buy stuff, and/or think that their home will appreciate in value.

In sum, I could imagine those who choose to buy smaller homes might be doing it for class/education/taste based reasons rather than just because they want a more efficient home. Those with more education might value a big home less. I would guess it will take time for many American residents to come around to the way of thinking that a smaller home is more efficient. In the meantime, there are still many forces still pushing people to buy larger homes.

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