> The average home in 1960 was like 1600 sq ft, now its like 2800 sq ft.

Statements like this are not particularly meaningful unless there is actually a supply of 1600 sqft houses that are proportionally cheaper, otherwise you're just implying a causal relationship with no evidence.

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crossbody an hour ago | parent [-]

Supply is driven by demand unless there is a monopoly in house building (there isn't). If this wasn't the case, one could quickly become a billionaire by starting first company that build small houses that are supposedly in demand but not provided by the market

	▲	phantasmish 26 minutes ago \| parent \| next [-]
		This is developers maximizing profit per lot. All this means is there are enough buyers who can afford 2,800 sqft houses to keep builders from wasting a lot on a 1,600 sqft house. There could be a lot more people who want a cheaper 1,600 sqft house (including some of the 2,800 sqft house buyers!) than who want 2,800 sqft houses, but the market will keep delivering the latter as long as the return is better (for the return to improve for 1,600 sqft houses, see about convincing towns and cities to allow smaller lots, smaller setbacks, et c).
	▲	p1necone an hour ago \| parent \| prev [-]
		You're still presupposing that there's a linear (or at least linear enough to be significant amongst the myriad other factors involved) relationship between square footage of house and cost. And that that relationship extends arbitrarily downwards as you reduce the square footage.