This trend boils down to a tendency for building ever-larger homes. And so as prices stay roughly flat per square foot, that ends up driving up the price of housing.
But Business Insider is in New York.
For many city dwellers, a 2,000 square foot home is laughable. Yet, prices and rents keep going up.
What's going on?
What makes housing so unaffordable?
It's partially that there just isn't significant housing stock being built for the bulging demographic of young, single people in their 20s. Millennials have no need for four bedroom, three bath tract homes in the (largely undesirable) suburbs. They want to live in downtown areas that are walkable with amenities.
And that sort of housing just isn't being built fast enough to keep rents from skyrocketing.
We talked to Constantine Valhouli, a principal at New York-based real estate research and development company the Hammersmith Group about some of the issues on the supply side.
Part of the problem, he says, is that "we're looking at lagging not leading indicators."
Young people want to live in urban areas, but we aren't seeing that really reflected in building trends. "Given that people are willing to trade space for convenience and [other amenities], it seems weird that the suburban home building is still building exactly the same."
At the same time, developers who do want to do these sort of projects run into all sorts of arcane laws and regulations, many of which date to a time of trying to stamp out single-room occupancy (SRO) housing, Valhouli explains. That means that affordable, plentiful housing for single young people can be hard to build in the city.
"When it comes to micro apartments, they require a minimum of 400 square feet. There are weird kinds of rules, like you can't have an entire building of studios. You have to balance the 400 square-foot ones out with much larger ones. The whole thing ends up removing a key aspect of affordability," he says.