Derek Thompson wrote the story of the year so far at The Atlantic about how anti-social we’ve become as a society:
Some facts and figures from Derek’s excellent piece:
- 74% of all restaurant traffic is takeout or delivery (up from 61% pre-Covid)
- The share of people have dinner or drinks with friends on any given night has declined by more than 30% in the past 20 years.
- Adults now spend an additional 99 minutes at home on any given day compared with 2003.
Things were already heading in this direction because of technology but it seems the pandemic sped up the anti-social behavior to a degree we’ve never seen before. We don’t go to bars, restaurants or movie theaters as much as we used to. And we’re spending way more time at home.
Derek goes through the numerous implications of this shift but here’s one he didn’t get to — this is going to have a huge impact on the housing market.
Think about the massive shifts that have occurred this decade alone.
Millions of white-collar workers are now able to work remotely from their homes. The grand experiment during the pandemic showed that, yes, workers can be just as efficient or more without coming into the office. And even if some firms are making employees come back to the office it’s often 3-4 days a week.
So you not only have a situation where people are choosing to spend more time at homes on their screens, but many of them are also working from home.
Your house has never been more important than it is right now. And it’s not like this anti-social behavior is going to get better anytime soon once we all have virtual reality, 90 inch TVs and robots that will wait on us hand and foot. Innovation isn’t going to stop, for better or worse when it comes to socialization.
This puts a premium on where you live.
When I was in college my dorm room was basically a prison cell. It was a tiny room with cement walls, poor ventilation and a shared bathroom with 50-60 other guys who lived on my floor. But it didn’t matter because it was just a place to lay my head and keep my stuff. My living situation didn’t matter because I was always out doing something — class, the library, practice, the weight room (not to brag), the cafeteria, parties and other social events.1
That living situation was fine when I was young, had a social life and didn’t know any better. But things change. I have three kids, a dog and a bunch of stuff. I desire more comfort and room in middle age.
I’m not alone.
Luckily, homes have improved and gotten bigger over the years. The average new home in 1950 was just 983 square feet. By 1970, that number was roughly 50% higher at around 1,500 square feet. The median size of a new home built in 2023 was more than 2,230 square feet. And we have fewer people living in this homes since families are smaller than they were in the past.
Less than one in four new homes built in 1970 had 4 bedrooms or more while 40% of them came with 1.5 bathrooms or fewer. Today, half of all new homes have 4 bedrooms or more while 96% have two bathrooms or more. Nearly one-third of all new homes now come with a 3-car garage.
Yesterday’s luxuries have become the necessities of today.
My guess is the list of necessities will continue to grow for those people who spend more time in their homes than ever before. More homes need an office. People are investing in home theaters and gigantic TVs instead of going to the movie theater. The backyard needs to become an oasis for relaxing and entertaining.
Houses are already bigger and better than they were in the past. With time spent in the home increases I would expect many homeowners to keep looking for bigger and better houses when it comes to the features they desire.
Spending more time at home will only add to the premium we currently place on housing in this country.
I’m not saying this is right or wrong.
But if technology continues to make us anti-social creatures and more people are working from home than ever before, we either need to build more homes or get used to the fact that housing prices will trade at a premium to the past.
I’m not necessarily saying this has to translate into higher housing prices. But it will translate into higher housing costs for those who place a premium on the size of their home and its features.
Michael and I talked about the anti-social century, the housing market and much more on this week’s Animal Spirits video:
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Further Reading:
Why Housing Prices Are Getting More Expensive
Now here’s what I’ve been reading lately:
Books:
1The only thing we did in our dorm rooms was play Mario Kart, watch dating shows after class and pre-game before going to a party.