It's no wonder the population is living in older houses than a generation ago when housing starts have declined and population has increased 50%.

Anyhow, as shown in my previous post, large houses are affordable, smaller houses are even more affordable. Indeed, just as affordable as at any time in the last 50 years. Meanwhile, the cost of living has fallen dramatically. It now costs less hours of work to purchase almost anything. This chart shows that real income has risen almost 50% in a generation. Unfortunately, real consumption has risen at the same rate. We're back to 'shiny things' or diminished financial management skills aren't we?

Anyhow, ignore me and the statistics I have presented if you like. Instead, turn the PC off and go and talk to some people from a generation or two ago. Ask them how often they ate out at restaurants, how often they took interstate or overseas holidays or how many TV's they had. Ask them how many toys they received for their birthday or how often they drank good wine and ate prime cuts of meat.

Do you have any actual data to back that up?

I've just been over to Zillow.com and searched the entire USA for 1200-1600sqft single family houses, for sale privately or by agents. Here's what I found...

14,000 under $50k
45,000 in $50-100k range
72,000 in $100-150k range
50,000 in $150-200k range
24,000 in $200-250k range

The majority of 1970-1980's sized houses are in the $100k-150k range. Demographica classify an affordable house as being three times the median household income. Therefore, the majority of 1200-1600sqft single family houses in the USA require a household income of $33,000-$50,000. To an Australian (like me) that is real-estate utopia, particularly when you consider our wages are lower, our cost-of-living is higher and our interest rates are much higher.

A similar search for 'McMansions' (2100-2500sqft) reveals $150k-250k is the segment with the largest number for sale. They require a family income $50k-83k to fall into Demographica's 'affordable' category.Still very affordable.

By international standards you people are living in Real Estate Bargain Central.

Of course new houses and existing are not the same. My main point was that if people are willing to live to the same standard, in the same sized house as previous generations, they would be as financially secure (I would argue better). Unfortunately, very few people are willing to go without modern "necessities". The author can attack the notion of 'shiny things' all she likes. I've personally lived long enough to see the difference between the generations. The book looks like an interesting read however.

And what data are you looking at to conclude that housing is 'phenomenally over-expensive'. If we were talking about Australia or the UK I would totally agree but most data I can find shows that the US is reasonably affordable. Check here or here for example

According to this article houses have grown in size by 64 percent!

In 1970, the average new single-family house was 1,400 square feet; today it's 2,300.

if you adjust for inflation, houses of the same size and comparable features are the same price today as they were in the 1970s.

Of course prices always rise in desirable areas. Nothing has changed there. What has changed is the appetite for more and more shiny things. Our economy depends on people living beyond their means. It's how listed companies grow consistently faster than the CPI but that doesn't mean people have no other option. People could choose to live more simply, within their means, just like their parents did.

Mmmm. I'm gonna retract most of what I have said because It's just clicked... The original article discussed discretionary spending. By that measure, the article is right. However, the choice of a house and a suburb is also discretionary. And if people choose to live in a double-sized house (compared to 1979) they shouldn't be shocked that housing costs have risen. We are still conspicuously more wealthy than our parents.

Nice opinion. Look, I have no argument with the statement:

Having a child is now the best single best predictor that a woman will end up in financial collapse.

But the preceding statement:

Even though today's families have two incomes, they have less money left over for discretionary spending than comparable one-income families did 30 years ago

is clearly wrong. In 'middle class' westerners in 2009 clearly have more discretionary spending money than their equivalent 30 years ago. Surely, you only need to compare your lifestyle to your parents to realise that.

These statements:

because the average family is spending nearly 50% of their income on the mortgage payments

and

In 1981, the median family filing for bankruptcy owed 80 percent of total annual income in credit card and other non-mortgage debts; by 2001, that figure had nearly doubled to 150 percent of annual income.

show that these people are bad financial managers. Could it be 'keeping up with the Jonses' that makes people over-extend themselves financially?

Take an average 20 something couple from 2009 and drop them in 1979 and they will be fabulously wealthy compared to their peers. The 2009 couple have a 4 bedroom, 3 bathroom house in a well-to-do suburb, furnished with near-new furniture and probably have two late-model cars parked in the double garage. They eat out at restaurants on a very regular basis and eat prime cuts of meat most other nights. They take regular interstate or overseas holidays. Their kids have a freaking mountain of toys and go to a private school. In 1979 these people would have been among societies most privileged.

Unbelievably though 2009 couple are "struggling". There can only be three possible explanations...

1. They are more greedy than 1979 couple.
2. They are poorer financial managers than 1979 couple
3. Both of the above.

What, did they have the antivirus set to "manual update"?

...an even less inspiring logo. Like 'Circle Brand' computers. Then they could have gone after everyone! GE, BMW, Vodafone, Starbucks, Target and tons more. What a missed opportunity.