Giant American houses: another symptom of overconsumption.

In the United States, the median size of newly built single-family residence is about 2,200 square feet (pdf). This works out to about 204 square meters. According to the 2000 census, there were 2.59 persons per household. So this means that the average American in a new home is using 78.76 square meters of living space per capita.

Comparsion to Asia:

  • China: 73.2 square meters, 2.93 persons per household, 24.97 per capita.

  • Japan: 97.6 square meters, 2.66 persons per household, 36.7 per capita.

  • South Korea: 81 square meters (pdf), 3.1 persons per household, 26.13 per capita.

    Comparison to Europe (source, 2002, pdf warning)

  • Germany: 86.7 square meters, 2.1 persons per household, 41.3 per capita

  • France: 88 square meters, 2.4 persons per household, 36.7 per capita

  • Italy: 90.3 square meters, 2.6 persons per household, 34.7 per capita

  • United Kingdom: 85 square meters, 2.4 persons per household, 35.4 per capita

  • Spain: 85.3 square meters, 3.1 persons per household, 27.5 per capita


    US: 204 square meters, 2.6 persons per household, 78.5 per capita.
    Asia: 83.9 square meters, 2.9 persons per household, 29.3 per capita.
    Europe: 87.1 square meters, 2.5 persons per household, 35.1 per capita.

    Converting back to square feet for readability:

    US: 2200 square feet, 2.6 persons per household, 846 per capita.
    Asia: 903 square feet, 2.9 persons per household, 311 per capita.
    Europe: 937 square feet, 2.5 persons per household, 375 per capita.

    In other words, new houses in the United States are 2.6 times as big as houses in Asia and 2.2 times as big as those in Europe.

    In 2005, the median price of a new home sold in the United States including the land was $240,900 (pdf). A May 2006 study by the Federal Reserve Board of land value as a percentage of home value in major cities found that land averaged 51% of the cost of a home. This means the construction portion of the average home cost $118,041 while the land cost $122,859. Per square foot, this means the sales value of a home per square foot excluding land worked out to something like $53.66 - which is a bit off of the standard $100-200 PSF I have heard in the past. I'm going to run with it, though.

    Analysis of waste in home building:

    I can't assume that the cost of constructing a home scales exactly per square foot -this is obviously not true since a smaller home is more expensive to construct per square foot because some items like a roof, electrical, plumming, etc don't change in cost much when you have a smaller house. We'll adjust it by 50%, just for safety's sake from $53.66 psf to $80.49 psf.

    If Europe can live in 375 square feet per capita, so can America. We have slightly more people per household (2.6 vs 2.5) so we would need slightly larger houses. 2.6 times 375 square feet = 975 square feet (or 90.6 square meters).

    975 square feet x $80.49 per square foot = $78,477. Add back in the cost of land at $122,859, and your total home price SHOULD BE $201,336 - a difference of $39,564.

    Cash flows of the wasted money.

    Per, the average 30 year fixed mortgage is currently at 5.8%. We'll assume the buyers put down 20% and paid the closing costs in full.

    2200 sq foot house: $1130.79
    975 sq foot house: $945.08
    Difference: $185.71/month for 30 years.

    If this difference were invested in the market at 10% return with 3% inflation, the present value of this difference is $153,625!!!


    American preference for MUCH larger homes than world average is resulting in a tremendous waste of wealth. The direct costs of a larger home (mortgage payments, missed opportunity to invest cash flows) are hurting their ability to retire. In addition, the indirect costs, such as higher property taxes and MUCH higher energy costs are further eroding cash flows that could otherwise be invested.