Apartments Shrinking in Major U.S. Cities

December 13, 2012

 As I browsed through the latest issue of AARP Bulletin last night, the following article caught my eye.

Tiny Apartments

 It’s very rare that I come across something like this – hard data on per capita consumption that can be linked to population density.  As reported in the article,  apartments are shrinking in major U.S. cities. 

Compare the size of these apartments to the average-sized home in the U.S.  The average per capita dwelling space in the U.S. is 710 square feet.  That means that the average single person occupies a dwelling (likely an apartment) of 710 square feet.  The average family of four occupies a dwelling (likely a single family home) of 2,840 square feet.  As reported in this article, apartments in large, densely populated major cities of the U.S. are shrinking down to 220-330 square feet. 

The fact that people in large cities tend to live in apartments isn’t news.  Nor is the fact that single young people, just starting out in their careers, choose to live in small apartments.  I did when I was discharged from the Navy and began my career in the Cleveland area.  (My apartment dwarfed those being reported in the above article.)  Even though I was living in the ‘burbs among many nice homes, I chose to live in an apartment because that’s all I could afford at the time and because I had no interest in a bigger home. 

But as I pointed out in Five Short Blasts, population density is a major factor in forcing people into smaller dwelling spaces than they’d otherwise choose.  (See Figure 5-2 on page 88.)  The average japanese citizen occupies a dwelling space less than one third that of the average American’s home, not because they like living in crowded, cramped quarters but, because Japan is ten times as densely populated as the U.S., there isn’t room for anything larger. 

This article is further corroboration of the effect, reporting that small apartments are now getting even smaller as these cities grow more densely populated and as the demand for housing becomes more intense.  Let’s focus on the data reported for San Francisco, where that city is considering reducing the legal minimum apartment size from 290 square feet to 220 square feet.  Consider the impact on per capita consumption.  The per capita consumption of flooring materials is reduced by 24%.  So too is the per capita consumption of materials used in the ceiling.  The per capita consumption of materials used to build the walls – lumber, drywall, nails, tape and joint compount, and paint – is reduced by 13%.  The per capita consumption of wall-hangings is reduced by that amount as well.  And thanks to the 24% reduction in foor space, the consumption of furnishings is reduced even more, since occupants still need the same amount of aisle space between the furnishings. 

The problem is that the denizens of these tiny digs are just as productive as any other workers and just as hungry to earn the income needed to pay for these over-priced dwellings.  Just as productive, but consuming far less.  It’s a trend we find in nearly every aspect of the economy as our world grows more densely populated.  You do the math.  It’s impossible to consume less in per capita terms without having an equal impact on per capita employment.  Worsening unemployment is absolutely inescapable. 

Of course, economists don’t think in these terms.  They see urban population densification as synonymous with a densification of economic activity – more money spent per square mile.  They dismiss  the decline in per capita consumption of dwelling space and other goods with the claim that people will simply spend their money on other things – like services and entertainment, and create jobs in those sectors.  Never mind the fact that the high cost of these apartments leaves people without any additional income or the fact that people in less densely populated conditions enjoy those same services and entertainment in greater measure because they actually do have the money.

That this obvious inverse relationship between population density and per capita consumption continues to elude the field of economics is astounding and tragic.