How Big is Too Big?

The average US home has grown in size from 1,000 square feet in the 1950's to somewhere in the 2,400sf area in the late aughts. At the same time, the number of people per home has dropped from 3.5 or so to 2.5 or about 1000sf per person. 

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Is it any wonder the amount Americans owe on mortgages has increased from about 20% of the size of GDP to 70% of the size of GDP? Over 2/3 of the value of everything this country makes in a year. That just floors me.

www.calculatedriskblog.com

I didn't talk about housing in my 5 Rules mainly because there are so many ways to gain shelter and I obviously have a bias toward small towns and small farms. But if I were to add a sixth rule I think it would be KISS - Keep It Small, Stupid. Granted, we now live in the largest house we've ever owned, but that's the key, we own it.

Several bloggers I read were talking about housing and households this week - Calculated Risk (a great economics site if like me, you understand charts better than equations), John Michael Greer, Sharon Astyk and some others. They talk a lot about declining resources and that dovetails right into the whole idea of a less-is-more lifestyle.

When we decided to abandon CA to the real estate flippers 6 years ago, we had a few criteria; somewhere in the center of the country, east of the treeline and south of the 200-day growing line (think somewhere south and east of central Kansas) - away from cities, 20+ acres of tillable land, 35"+ rain - those we my criteria, plus - - -

 an old 2-story house...












So yea, we have over 1,000sf per person in our house but we don't owe anything to the bank and that makes all the difference. But as far as being the wisest decision, an old house (ours is just under 100 years old) isn't the best. This old place is framed with oak - yep, oak, so it's gonna stand up for a while longer and the foundation and framing are about as straight as they get so I have no qualms about putting in time and money bringing the insulation and mechanicals up to snuff. But it is a long process and if you or yours don't have the experience of living in a work zone for a really long time you need to think long and hard about a fixer.

Much better (if you all the parties can agree) would be building a new, frugal home from scratch. I love this old house and I'm trying to get all the holes plugged and some solar gain but it's tough, starting new with solid plans would get you to frugal fast. I'd build a small, bermed, passive solar house using plastered ICF walls (basically a Styrofoam/concrete sandwich) and galvalume or tile roof. I'd spend all I had on the envelope and finish the interior as I could get the goodies.

There used to be a formula, back in the pre ETF/bundled securities days, it was called a qualifying ratio and when we bought our first house we needed the housing cost to be less than 24% of our gross income and all our loan payments plus mortgage to be less than 28% - oh, and 20% down too.