...houses are much larger and nicer than they were in 1970. Living space per person has almost doubled, the average house is 1,000 sq. ft. larger and has amenities like walk-in closets and expensive counter-tops you wouldn't find on an average house in the 70s.
Whilst I can find articles to see where you got this idea from, this doesn't quite pass the smell test. This is true only for new homes (i.e. the well off to construct new dwellings) and if you include established homes and the number of children per adult this picture changes.
Here is a page showing the trend of less people per household in the US over time. It may seem like there has been an improvement in living space per person (again check for all residences and not new ones in your stats), but to me it just means that adults are sharing space in the cities that don't really want to and can't bring up kids like they could in the past for financial reasons.