Mortgages

(cont'd from yesterday's post)

Why are houses so much bigger today than they were 30 or 60 years ago? Yesterday's post showed that average size went from 983 square feet in 1950, to 1500 sf in 1970, to 2675 sf in 2014.

Innovation is part of the answer, when business owners and craftsmen find improved ways to save money while making a better building material. Because innovation also drives every other industry as well, our economy grows as wealth is created. A bigger economy means average home buyers have more to spend on their homes.

One more reason homes are bigger today is that borrowing policies for home buyers are "looser" by far than they were in the past. 

In 1930 for example, you could only borrow half the home's value and had to pay off your debt in 10-15 years. Terms got too "loose" running up to the 2007-2008 recession. Borrowers could borrow the whole value of the home with little or no upfront payment. Banks failed, and failure cascaded.