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.

Downsizing, Marie Kondo, and all the stuff Americans own

Many older Americans want to downsize (and cash out on their homes), Marie Kondo’s approach is popular, but where will all that stuff owned by older homeowners go?

Auctioneers and appraisers, junk haulers and moving companies all seem to be echoing the same thing: The market is flooded with baby boomer rejects. And they cite a number of reasons our kids are turning down the possessions we so generously offer to them. They rent rather than own, live in smaller spaces, collect more digital than physical items and tend to put their money toward experiences rather than things…

Her kids also rejected three sets of formal dinnerware, including Haviland China; vast collections of Lladro figurines and Department 56 Christmas villages; as well as 3,000 Beanie Babies and boxes of soccer awards she and her husband, who both coached for many years, earned with their children.

The only offer she got on any of her treasures? One son wants her Hallmark Frosty Friends ornaments she’s collected over 37 years “because he knows how much they are worth.”

Two scenarios could develop:

1. There will be a growing market in stuff that older Americans no longer want. Perhaps many millennials or Gen Z do not want stuff from their parents but some other American will want it. It does not just have to go to resale shops; enterprising individuals and firms could shop all these items online to find buyers interested in particular niches. Perhaps this could even expand to international markets and be shipped in bulk around the globe.

2. Much of the stuff will simply be thrown away, particularly items that are more sentimental in nature. Some lucky owners will find people to take or buy their unneeded items but much of the rest will simply find its way into landfills. Decades of consumption will end in the garbage can.

I have not seen any estimates either way of how much money all of these goods could generate or how much waste could be involved (or a combination of both).

Also, consider the implications of such a change: younger generations do not take material objects from their parents and grandparents, creating a bit of a gap in a material timeline. Perhaps the shifting of wealth from generation to generation more often takes the form of helping to pay for housing or student loans rather than tangible goods. How does this change memories and collective understandings of the past?

 

Recycling was only a band-aid; Americans need to consume less

Now that the recycled products of Americans are no longer desirable, perhaps it will start a new broader conversation: when will Americans consume less?

This end of recycling comes at a time when the United States is creating more waste than ever. In 2015, the most recent year for which national data are available, America generated 262.4 million tons of waste, up 4.5 percent from 2010 and 60 percent from 1985. That amounts to nearly five pounds per person a day. New York City collected 934 tons of metal, plastic, and glass a day from residents last year, a 33 percent increase from 2013.

For a long time, Americans have had little incentive to consume less. It’s inexpensive to buy products, and it’s even cheaper to throw them away at the end of their short lives. But the costs of all this garbage are growing, especially now that bottles and papers that were once recycled are now ending up in the trash…

The best way to fix recycling is probably persuading people to buy less stuff, which would also have the benefit of reducing some of the upstream waste created when products are made. But that’s a hard sell in the United States, where consumer spending accounts for 68 percent of the GDP. The strong economy means more people have more spending money, too, and often the things they buy, such as new phones, and the places they shop, such as Amazon, are designed to sell them even more things. The average American spent 7 percent more on food and 8 percent more on personal-care products and services in 2017 than in 2016, according to government data

But even in San Francisco, the most careful consumers still generate a lot of waste. Plastic clamshell containers are difficult to recycle because the material they’re made of is so flimsy—but it’s hard to find berries not sold in those containers, even at most farmers’ markets. Go into a Best Buy or Target in San Francisco to buy headphones or a charger, and you’ll still end up with plastic packaging to throw away. Amazon has tried to reduce waste by sending products in white and blue plastic envelopes, but when I visited the Recology plant, they littered the floor because they’re very hard to recycle. Even at Recology, an employee-owned company that benefits when people recycle well, the hurdles to getting rid of plastics were evident. Reed chided me for eating my daily Chobani yogurt out of small, five-ounce containers rather than out of big, 32-ounce tubs, but I saw a five-ounce Yoplait container in a trash can of the control room of the Recology plant. While there, Reed handed me a pair of small orange earplugs meant to protect my ears from the noise of the plant. They were wrapped in a type of flimsy plastic that is nearly impossible to recycle. When I left the plant, I kept the earplugs and the plastic in my bag, not sure what to do with them. Eventually, I threw them in the trash.

The whole American lifestyle revolves around consumption and includes innumerable objects that are difficult to reuse or refuse. Much of it seems to come under the ideologies of efficiency, cheapness, and convenience. Envision Walmart. It is not just about small items or particular companies; it even makes its way to some of the largest purchases Americans make including buying larger homes to store more stuff.

What would it take to start the ball rolling away from consumption of goods? A small set of Americans have voluntarily done this – I recall reading about downshifters in sociologist Juliet Schor’s twenty year old book The Overspent American. A major company like Amazon or Walmart could make a big dent. Or, perhaps some government regulations might help nudge the free market in the right direction. There is a slight chance a movement of conscious consumers could help lead to change.

And if consumption levels do end up dropping, this could effect all sorts of areas in American social life. What would happen to fast food? The smartphone industry? Housing? Carmakers? Food producers and distributors? Watching it all play out could be fascinating.

Of course Tidying Up with Marie Kondo starts in Lakewood, CA

In watching one of the popular new TV shows, Tidying Up with Marie Kondo, I was not surprised to see the first episode take place in Lakewood, California. Here are several reasons this makes sense:

  1. Lakewood is a paradigmatic suburb. It does not quite receive the amount of attention as Levittown but it is known as an important post-World War II suburb of Los Angeles. Read more about the suburb’s unique history on the city’s website.
  2. The home depicted is relatively small compared to many of the suburban homes constructed today. This is part of the tidying issues the family faces: the American pattern is to accumulate more stuff over a lifetime (partly to express a certain status) and one solution for adjusting to this stuff is simply to purchase a larger home.
  3. The family is depicted as living an ideal family lifestyle: they have been married five years (if I remember correctly), have two small kids, and live in a suburban single-family home. This family/single-family home connection is strong in the suburban psyche.
  4. The emphasis of the episode is on the private life of the family inside the home. Even with the show focused on the belongings inside the home, there is very little connection to the outside world, whether neighbors, or the larger suburb, metropolitan region, or nation. All these privately-held goods and familial relationships look like they are in a small bubble that the participants prefer to stay in.

Given the suburban emphases on single-family homes and consumption, perhaps it makes all the sense in the world to start such a show in a well-known suburb.

What was present and missing from my peak suburbia drive to Costco

A few days ago, I picked up a few family members and we visited the nearest Costco (utilizing one of their memberships). One family member remarked this may have been a peak suburbia experience – and they may be right for several reasons:

  1. We traveled in a minivan. We didn’t necessarily need all of that space but it could have proved useful at some point.
  2. We stopped at McDonald’s along the way. The minivan went through the drive-through, a common American occurrence.
  3. We traveled to a quintessential big box store: Costco. The store was crowded, we browsed for over an hour, and we purchased a good number of items.

At the same time, we missed a few elements of a truly peak suburban experience:

  1. The trip to Costco was not sandwiched between a kid’s activity. Put a pick-up from preschool at the beginning and a travel to a lesson or sports practice at the end.
  2. The crowds and traffic were not too bad because of the time of day we went to Costco. Instead, make this all part of a evening commute between roughly 3:30 PM and 6:30 PM.
  3. While we certainly purchased items that we did not need, I would not say that we mindlessly consumed on bulk items. Most or all of the items had a justifiable reason for their purchase.

The combination of driving in a large vehicle for consumption purposes among a semi-dense landscape…is this what Americans dream of when choosing to live in suburbia?

“Americans demand more bedrooms, baths”

I argued a few days ago that the American system is set up to encourage people to purchase bigger homes. Look, the system is working! Americans continue to build and buy bigger homes.

The latest numbers from the U.S. Census Bureau show newly-constructed homes in 2017 are 4 percent larger on average than a decade ago. And they come with a larger price tag — the average price of a new home jumped 23 percent from $313,600 in 2007 to $384,900 last year. Meanwhile, the average family size in the U.S. continues to shrink, from 3.33 persons in 1960, to 2.54 in 2017…

Below are some takeaways from the Survey of Construction data released in June. Based on the most common features, the most popular home built in 2017 was a two-story, two-garage home with more than four bedrooms and three bathrooms.

Several graphs highlight the proliferation of bedrooms and bathrooms in recent years:

Chart: Number of bedrooms in new single-family houses completed

Chart: Number of bathrooms in new single-family houses completed

Even with plenty of critics, American builders and buyers still seem to want larger homes. Perhaps the market is primarily open these days to wealthier buyers and builders may not be interested in constructing starter homes but this is not an isolated blip in the data: for decades, Americans have sought larger homes.

 

Where is the evidence? McMansion owners “favor” Cadillac Escalades

The connections between SUVs and McMansions continue: this article features a list of traits of Cadillac Escalade owners and their favored kind of housing.

The Escalade has long dominated the Navigator both in sales and cultural currency. Check out this list of Ten Seriously Dope Cadillac-Inspired Hip Hop Tracks. Indeed, the Escalade has long been a favored ride of the hip-hop crowd, pro athletes, Wall Streeters, business owners, drug kingpins and “McMansion” owners…

Who’s buying these hulking SUVs, according to the data? Rebecca Lindland, senior analyst for KBB.com, says it’s more than just the bling and business tycoon sets. “The Escalade and Navigator shoppers on kbb.com are very similar, leaning heavily toward a domestic, family-oriented mindset. But the Escalade buyer tends toward techie side, so if the new Navigator is stacking up well against Escalade on the telematics interface, Cadillac could have its hands full.”…

The market for large luxury SUVs is as well established as cigars, expensive brandy and coal furnaces. Even these harsh words from Consumer Reports can’t dampen the enthusiasm for these vehicles among the rich and brash. “This hulking SUV can comfortably accommodate seven, effortlessly tow more than 4 tons, and practically cast the shadow of the Queen Mary II. While the Navigator pampers you with power everything and a rich interior ambience, a few details detract from the idea of embracing this almost $90,000 behemoth.”

That people of different class statuses purchase different brands and models is well-established, going back to the General Motors brand for every buyer as well as more academic studies showing different tastes among different social classes. What I would want to see in this case involves something more: where is the data that shows McMansion owners favor Escalades over Navigators? Or, that people who own Escalades are more likely to live in McMansions than other kinds of homes?

This is not the first time McMansions have been connected to Escalades. For example, take the New York Times. From a July 2001 story:

There are those who are drawn to the Escalade simply because it is so far over the top. You see them pulling up to McMansions in the suburbs and to hip-hop clubs downtown, making a statement before the truck comes to a halt. On the flip side, it is not hard to find people who are appalled, sometimes with fanatical fervor, by what the Escalade represents. Glaring from subcompacts or crosswalks, they seem to hold this hulk of metal responsible for global warming and dolphins in tuna nets.

Or an October 2005 review of a Lincoln SUV subtitled “A McTruck for the McMansion“:

The Mark LT is priced thousands below its prime competitor, the Cadillac Escalade EXT, but the equipment list shows why. The Caddy has 45 more horsepower and comes only with full-time four-wheel drive. (Lincoln’s system is part time, and costs extra.) Lincoln doesn’t offer a navigation system, air-conditioned seats, traction assist, stability control or power folding mirrors. Its power seats have manual recliners.

Or a January 2014 story titled “In Housing, Big is Back”:

Affluent buyers are drawn to new homes in part because the market for existing homes is so competitive, said Stephen Kim, a Barclays analyst. Inventories of existing homes for sale remain low, and buyers are less interested in large homes in far-flung developments — the McMansions of the exurbs that were emblematic of the boom and bust…

In April 2012, they selected a model costing about $850,000 from a luxury builder and chose a number of standard options for an additional $650,000. Ms. Sleep, who was in the process of selling the software firm she founded nearly two decades earlier, added a wall of windows to the basement and furnished it with a pool table, a media room, a wet bar, a home office and a suite for their youngest daughter to use when she was home from college.

They added a second master bedroom suite, on the ground level, for use when they are older and stairs become tougher to climb. They upgraded floors, carpeting and molding, added a sunroom and a large deck and supersized the garage door to fit Ms. Sleep’s Cadillac Escalade. The home’s lighting and temperature, as well as media on any of 14 televisions and the sound system, can be controlled remotely.

I get that it takes a certain amount of wealth to own either an Escalade or McMansion – and linking McMansions to wealthy people is common – but I have yet to see more evidence that McMansion owners prefer Escalades.