Housing built small in the 1960's is still going for unaffordable for most rates in my area ...

Square footage is more a function of what builders are willing to build than what people actually want. Try getting a 1200 sq ft 2bd/2ba built today. Builders will laugh at you. All they want to build are large mcMansions and 'luxury' apartments, because that's where the profit margins are. There are in fact, lots of people out there who are perfectly willing to live in smaller, cheaper homes, but they simply aren't built anymore. Anyone who wants this has to go buy a little house from the 50's or 60's.

Looks like the housing problem comes from the fact that average incomes have not been adjusted for inflation... which means the income of the rich have been over adjusted.