Earlier quoted context omitted.
Not only that, but the construction costs are cheaper per square foot for larger houses. Much of the cost of a house is in the kitchen and bathrooms. But bigger houses almost always still only have one kitchen, even if it is a lot fancier, and the number of bathrooms doesn't go up linearly. Bigger houses just have bigger rooms mainly, and also extra rooms that are empty and don't cost much to build ("bonus rooms", de…
However, the operational (heating, AC) and maintenance costs of a large house do scale more directly with it's size, especially for jobs that involve the whole structure, like re-roofing, re-siding, etc. So in the end they end up being far more expensive to live in.
Operational and maintenance costs are a different factor; we were talking about house price, and I went into construction cost. Operations costs are different, and consumers are pretty infamous for only looking at initial costs and not thinking about operational/maintenance costs. This is especially true with cars: people look only at the purchase price and don't think about how much gas costs, so they buy a giant SUV even though it gets 50% worse fuel economy, and then they complain about how much it costs to refuel.