SOURCES: Federal Reserve; US Census Bureau, Historic Income Tables P-2, P-4. P-53, H-17; University of Michigan, Center for Sustainable Systems, “Residential Buildings Fact Sheet.” and “Small is Beautiful: US Housing Size, Resource Use, and the Environment.”Journal of Industrial Ecology, by Alex Wilson and Jessica Boehland. Standford University, Institute for Economic Policy Research, “Families as Roommates: Changes in U.S. Household Size from 1850 to 2000, by Alejandra Salcedo Banco De Mexico, Todd Schoellman, Michele Tertilt, 2009. Department of Economics Dartmouth College and NBER, ”Well-Being Over Time in Britain and the USA,” by David G. Blanchflower, Andrew J Oswald, Oct, 2000.  

The Social Contract

Following World War II, the US government embarked on the largest, most radical wealth redistribution project in history. In an effort to solve for both a housing shortage and a sluggish post-war economy, the idea was to subsidize home ownership in order to help build a robust new middle class centered around the 30-year mortgage.

As the data animation shows, there is an alarming disparity between wages and home prices. And in order to fill in the gap, house hold debt has risen over time as well.

What the housing collapse exposed was that many Americans were not as well-off as they'd imagined. Unable to pull out any more equity from their homes, the proverbial rug was pulled out from the system, exposing decades of stagnant wages, ballooning debt, and no piggy bank to draw from any longer.

 

SOURCES: Source: Zillow Analysis of Current Population Survey (2013-2014, 1976-2007), Decennial Census (1900-1980), One-year American Community Survey (2007-2013).

Black vs. White Home Ownership Rates

While the current system is a fundamentally flawed project, home ownership has historically allowed predominantly white families build generational wealth. Even though the United States passed the Fair Housing Act in 1968, that was a full generation after the implementation of the aforementioned "Social Contract." From 1945 to 1965, this mass exodus of white families from inner cities took their jobs and the investment of the government with them. Coupled with a full 20 years of housing value appreciation, allowing a once-marginalized community to buy into the white middle class was effectively an empty gesture.

Home vs. Family Size Over Time

In 1940, the average family household was 3.67 people. In 2003, it was 2.57. In 1940, the average size of a single family home was 1,100 square feet. In 2013, it hit a record high of 2,679 square feet. That means we have 25% fewer people occupying almost three times more space.